Investing.com -- U.S. stock futures hovered only slightly above the flatline on Wednesday, with traders taking caution ahead of a day filled with potential market-moving events. The Federal Reserve is preparing to unveil its latest forecast for interest rates over the remainder of 2024 and beyond. However, these predictions could be influenced by the outcome of a key May inflation reading prior to the end of the central bank's latest two-day policy gathering.
1. Futures muted
U.S. stock futures were broadly muted on Wednesday, as investors geared up for a much-anticipated Federal Reserve interest rate decision and the release of fresh inflation data out of the world's largest economy.
By 03:38 ET (07:38 GMT), the Dow futures contract had gained 30 points or 0.1%, while S&P 500 futures and Nasdaq 100 futures were mostly unchanged.
The benchmark S&P 500 and tech-heavy Nasdaq Composite both clocked record high closing levels for a second consecutive session on Tuesday, boosted in part by a jump in Apple shares (NASDAQ:AAPL). The tech giant released new artificial-intelligence enhanced features at its annual developers conference earlier this week in a bid to bolster demand for its devices.
Markets are now turning their attention to the conclusion of a two-day Fed policy meeting, which will be preceded by the publication of May's consumer price index -- a crucial gauge of price growth in the U.S. -- prior to the opening bell on Wall Street.
2. Fed decision ahead
Fed officials are widely tipped to leave interest rates at a more than two-decade high of 5.25% to 5.5% on Wednesday, meaning the central bank's outlook for future borrowing costs will be in the spotlight.
Policymakers at the Federal Open Market Committee are due to unveil their latest "dot plot", a collection of predictions about the Fed's rate path during the rest of 2024 and longer-term. Fed Chair Jerome Powell is also set to make a statement.
In March, the dot plot showed that most officials were seeing two or three cuts this year. But, in recent weeks, several Fed members have indicated that they are in no rush to ratchet down rates, saying instead they would like to see more proof that inflation is sustainably easing to their stated 2% target.
According to CME Group's (NASDAQ:CME) closely-monitored FedWatch Tool, the probability of a cut in September has slipped since one week ago, as traders reacted to a stronger-than-anticipated jobs report last Friday that raised the prospect of sticky prices.
3. CPI looms large
The Labor Department's latest consumer price index, which is scheduled to be released around thirty minutes before the Fed reconvenes for the second day of its latest policy gathering, could present a last-minute wrinkle in the central bank's policy projections.
Economists forecast that annualized headline price growth in May matched the previous month's pace, but slowed on a monthly basis. The so-called "core" reading, which strips out more volatile items like food and fuel, is seen decelerating slightly year-on-year and remaining in line with April's rate month-on-month.
A hotter-than-expected report could lead Fed officials to moderate their predictions for rate reductions in 2024, while a soft reading may convince more of them to estimate as many as two cuts.
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