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Dow futures gain altitude for a third session as investors await retail sales and Fed update

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Dow futures gain altitude for a third session as investors await retail sales and Fed update 2

Stocks look poised to climb Wednesday as investors awaited a reading on U.S. consumer spending activity amid the COVID-19 pandemic and a policy update from the Federal Reserve due later in the session.

How are equity benchmarks performing?

Futures for the Dow Jones Industrial Average were climbing 132 points, or 0.5%, to reach 28,039, those for the S&P 500 index advanced 16.75 points to 3,411.50, a rise of 0.5%, and Nasdaq-100 futures gained 30 points, or 0.3%, at 11,480.

On Tuesday, the Dow
DJIA,
+0.00%

 rose 2.27 points to finish at 27,995.60, while the S&P 500
SPX,
+0.52%

 gained 17.66 points, or 0.5%, to trade at 3,401.20, marking its third straight increase. The Nasdaq Composite
COMP,
+1.20%

 finished up 133.67 points, or 1.2%, at 11,190.32, logging back-to-back gains.

What’s driving the market?

Investors are awaiting the Fed’s first policy statement and updated economic projections under its new flexible inflation target strategy, which allows the central bank to let inflation run above 2% annually, and essentially calls for interest rates to remain lower for longer.

Market participants are watching to see how the central bank and Chairman Jerome Powell communicate the implementation of its new policy measures, announced last month.

Read:The Fed is ‘fighting the last battle,’ and here are the risks to its new strategy

The Federal Open Market Committee will release a policy statement at 2 p.m. Eastern on Wednesday. Powell will hold a press conference a half-hour later; and although no major changes to benchmark interest rates, which stand between 0% and 0.25%, are expected, market watchers will hope to glean more guidance from the Fed on the state of the economy and the expected pace of the recovery from the deadly pandemic.

The prospect of a prolonged period of support from the Fed has helped to bolster the U.S. stock market since its lows in March in the wake of the coronavirus pandemic, but investors are also weighing that support against further delays to another fiscal spending package expected from Congress.

Ahead of the Fed update is a report on U.S. retail sales for August, which is due at 8.30 a.m. Eastern, which may also give offer more clarity on the rebound in spending by consumers that have been laid low by social-distancing requirements and fears about contracting the coronavirus.

On Tuesday China reported its first increase in retail sales year-on-year in 2020. Retail sales grew rose 0.5% in August from a year earlier, according to data released Tuesday by the China’s National Bureau of Statistic.

The OECD’s latest forecast for global growth published Wednesday shows the global recession may not be as bad as expected. The Paris-based organization said it now expects the world economy to shrink 4.5% this year, less than its June prediction for a 6% decline, reflecting a slowly improving U.S. labor market and China data.

Which stocks are in focus?
  • Shares of Southwest Airlines Co.
    LUV,
    +1.37%

      edged up in premarket trading Wednesday, after the air carrier updated its financial guidance trends, including and upbeat outlook for load factor and reducing its third-quarter outlook for daily cash burn.

  • Unity Software Inc. raised on Wednesday the expected pricing of its initial public offering to $44 to $48 a share from $34 to $42 a share.

  • Facebook Inc. shares
    FB,
    +2.35%

      were in focus after a report that the Federal Trade Commission is preparing to file an antitrust lawsuit against the social-media giant.

  • Shares of FedEx Corp.
    FDX,
    +0.14%

     are drawing attention after the delivery and logistics company reported better-than-expected profit and sales for its fiscal 2021 first quarter, saying the world “has accelerated to meet our strategies” and that its workers’ effort had kept “the world’s health care, industrial and at-home supply chains moving despite the challenges of the global pandemic.”

Read:Forget value vs. growth. We’re in a quarantine vs. recovery paradigm now, this analyst says

How are other markets trading?

The yield on the 10-year Treasury note
TMUBMUSD10Y,
0.670%

  ticked down about 1.3 basis points to 0.669%. Bond prices move inversely to yields.

The ICE U.S. Dollar Index
DXY,
-0.18%
,
which tracks the performance of the greenback against its major rivals, was down 0.2% to 92.90.

Gold futures
GCZ20,
+0.30%

rose 0.3% to $1,972.40 an ounce on the New York Mercantile Exchange. The U.S. crude oil benchmark
CL.1,
+2.27%

  ,was 2.2% higher at $39.12 a barrel as investors continued to watch Hurricane Sally move toward the Gulf Coast.

Global equities were on the rise, with the Stoxx Europe 600 index
SXXP,
+0.28%

  up 0.3%, while the U.K.’s benchmark FTSE 100
UKX,

 was unchanged. In Asia, Hong Kong’s Hang Seng Index
HSI,
-0.02%

  closed fractionally lower and the Shanghai Composite
SHCOMP,
-0.35%

  lost 0.4%. Japan’s Nikkei
NIK,
+0.08%

 closed 0.1% higher.

Read next: Why Yoshihide Suga will struggle to hold down the yen as he takes the reins from Abe

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