U.S. stock futures edge higher as oil stays near six-week peak before Fed decision

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US futures, oil, Fed decision

Highlights

Dow E-minis rise 0.14%, S&P 500 E-minis up 0.05%, and Nasdaq 100 E-minis gain 0.01% as Brent crude trades at a six-week high before the Fed decision.
Markets expect the Fed to hold rates steady Wednesday, but still price in at least two additional hikes by mid-2027 amid persistent inflation above target.
Tesla climbs nearly 1% premarket, Meta raises its equity fundraising to $97.5 billion for AI, while Whirlpool drops 8.8% after a Q3 loss and missed revenues.

Fed outlook and market positioning

As reported by Reuters, Dow E-minis are up 70 points, or 0.14%, at 05:17 a.m. ET, while S&P 500 E-minis add 3.75 points, or 0.05%, and Nasdaq 100 E-minis rise 2 points, or 0.01%. The muted move comes as Brent crude holds near its highest level since late April after a slight rebound on Tuesday.

The Fed is widely expected to leave interest rates unchanged on Wednesday after raising them last month. Markets are still pricing in at least two additional hikes by mid-2027 as key inflation indicators remain elevated.

John Velis, head of Americas Strategy at BNY, says he does not expect a rate move this week, but adds that a further increase would not be unwelcome despite questions over its urgency. He says maintaining the Fed's credibility remains critical, with inflation running above target for more than 60 straight months.

Earnings and AI spending shape sentiment

Investors are also tracking a heavy earnings calendar, with Coca-Cola, Boeing and PayPal scheduled to report before the opening bell on Tuesday. Later this week, Alphabet, Microsoft and Amazon.com are due to release results that are likely to be scrutinized for evidence that heavy AI spending is translating into growth.

Among individual stocks, Tesla gains nearly 1% in premarket trading after rising more than 5% in the previous session. Meta Platforms is flat after increasing its biggest-ever equity fundraising to $97.5 billion to support AI expansion, while Whirlpool falls 8.8% after posting a third-quarter loss and missing revenue estimates.

Jefferies strategist Jane Gibbons says in a note that earnings growth for the so-called Magnificent 7 could lag the rest of the S&P 500, with the brokerage forecasting 21% growth for the group versus 32% for the remainder of the index. Sentiment also improves in the previous session after Anthropic discloses its IPO filing, boosting chipmakers and other AI-linked stocks after several difficult weeks.

Investors are separately looking ahead to the November 3 midterm elections, which will determine control of the U.S. Congress.

Our earlier coverage of the S&P 500’s push toward 8,000 explained how the rally has been driven by AI-linked megacaps even as investors grapple with higher oil prices, elevated Treasury yields, and political uncertainty ahead of the midterm elections. The piece noted that strong Q3 earnings may face a higher bar this season, with market breadth weakening and concentration risk rising as many stocks lag the index despite near-record levels.

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