U.S. stock index futures were largely unchanged on Wednesday, ahead of a Federal Reserve monetary policy decision widely expected to deliver an interest rate cut and hawkish commentary on the path of future easing.
The central bank’s ongoing meeting is likely one of its most divisive in years, as policymakers seek a delicate balance between reducing borrowing costs to support the labor market and curbing any reacceleration of inflation.
A prolonged absence of fresh economic data following the recent government shutdown, combined with uncertainty over who will lead the Federal Reserve next year, is adding to policymakers’ challenges.
White House economic adviser Kevin Hassett, an advocate for interest rate cuts, is a front-runner for the position.
Traders are pricing in an 89.9% chance that the Federal Reserve will cut interest rates by 25 basis points at 2 p.m. ET, according to CME’s FedWatch Tool, and are also betting on additional easing in 2026.
If the Fed delivers a hawkish rate cut, one where Fed chair Jerome Powell emphasizes ongoing worries about inflation and tries again to temper expectations for additional cuts next year, it will affect markets very differently than a more dovish cut would, said Daniela Hathorn, senior market analyst at capital.com.
Inflation worries have prompted market participants to price in higher interest rates by the end of 2026 in Australia, Canada and Japan.
The Fed’s balance sheet and plans to purchase short-term bills to ensure ample liquidity in the banking system will also be on investor radar.
At 7:00 a.m. ET, Dow E-minis were down 30 points, or 0.06%, S&P 500 E-minis were down 4 points, or 0.06%, and Nasdaq 100 E-minis were down 39.5 points, or 0.15%.
U.S. stocks have rallied since late November on lower rate expectations, bringing the benchmark S&P 500 within 1% of a record high. The Russell 2000 index, which tracks small caps , also hit a record high, outperforming broader Wall Street this quarter.
The rest of the week is likely to be dominated by earnings reports from major artificial intelligence players, including software company Oracle and chipmaker Broadcom, due after markets close.
Concerns over debt-fueled corporate spending, complex deal-making across the broader AI sector and uncertainty about how companies will monetize the disruptive technology have triggered sell-offs in both equity and debt markets in recent months.
On Wednesday, shares of energy equipment manufacturer GE Vernova gained 9.2% after forecasting higher revenue in 2026, signaling strong demand for its AI-related infrastructure.
Lending giant JPMorgan Chase steadied following a nearly 5% drop in the previous session after saying it expects higher expenses next year.
GameStop fell 6.3% after the video game retailer announced downbeat third-quarter revenue.
Casual dining chain Cracker Barrel lost 9.8% after lowering its annual revenue forecast.
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