Nasdaq set to rise ahead of first Fed policy decision under Warsh

NEW YORK: The S&P 500 and the Nasdaq were set to open higher on Wednesday, as chip stocks rebounded ahead of the first interest rate decision under new Federal Reserve chair Kevin Warsh.

Shares of richly valued chipmakers, including Broadcom, Micron Technology, Advanced Micro Devices and Intel, rose between 2.3% and 3.7% in premarket trading, recovering from Tuesday’s drop.

US stocks have been choppy after a sharp rally on Monday when President Donald Trump announced a preliminary US-Iran peace deal, which sent oil prices tumbling and eased inflation fears.

Investors’ focus is now on the Federal Reserve’s monetary policy decision, set to be released at 2pm on Wednesday.

Policymakers are widely expected to hold interest rates unchanged at the 3.50%-3.75% range as they wrestle with inflation pressures from higher oil prices fueled by the Middle East war.

Investors will also keep a close watch on the new Fed chair’s first press conference for his views on inflation, unemployment and the economic outlook.

The 10-year Treasury yield, the benchmark for global borrowing costs, edged higher to 4.43%.

“The last thing that Warsh wants to do is send the 10-year yield sharply higher.

“It’s really important for markets for the 10-year yield to stay below 4.5, especially now that oil prices are lower,” said Jeff Buchbinder, chief equity strategist at LPL Financial.

“So don’t expect any fast moves along those lines. And of course, he has to get the buy-in from the committee. So that will be a very long, drawn-out process,” Buchbinder said.

Data showed US retail sales increased more than expected in May, but a slowdown is likely as the cushion that consumers had from larger tax refunds depletes due to rising costs.

Retail sales jumped 0.9% last month after a downwardly revised 0.4% gain in April, the commerce department’s Census Bureau said, compared with economists’ forecast of a rise of 0.5%.

Traders see the Fed holding rates through much of the year, but are betting on a nearly 43% chance of a 25-basis-point rate hike in December, according to CME Group’s FedWatch tool.

By 08.38am, S&P 500 e-minis were up 8 points, or 0.11%, Nasdaq 100 e-minis added 198.5 points, or 0.66%, and Dow e-minis dipped 44 points, or 0.08%.

US stocks have recovered from much of the early June slump, with the blue-chip Dow touching record highs for the past two consecutive sessions, as a resilient US economy, broadening of the rally beyond tech shares and falling oil prices aided sentiment.

Oil prices hovered near a three‑month low, fueled by hopes that the interim peace deal between the US and Iran would allow oil to leave the Gulf through the crucial Strait of Hormuz.

The memorandum of understanding, not yet public, extends by another 60 days a tenuous ceasefire agreed in April, to allow room for talks toward a permanent truce.

Still, some uncertainty lingered after Trump said the Iran memorandum of understanding was not final, and he could resume bombing if he did not like it.

Shares of Elon Musk’s AI and rocket company SpaceX rose 3.1% after surpassing Amazon’s market value on Tuesday to become the fifth most valuable company.

CME Group slipped almost 3% after the exchange operator said its CEO, Terry Duffy, will step down on March 1, and transition to the role of executive chairman.

Carmax added 1.7% after reporting better-than-expected first-quarter revenue.