US stock index futures gained on Wednesday, supported by solid reports from Alphabet and Microsoft. This made it possible to compensate for yesterday's drop witnessed during the normal session. However, do not hurry to open wallets for new purchases on the correction because ahead of us is the Federal Reserve's decision on the interest rate, where you can expect anything. Dow Jones Industrial Average futures increased 168 points or 0.52 percent. S&P 500 futures were up 1 percent, and Nasdaq 100 futures were up 1.51 percent.
Investors are waiting for an announcement from the Federal Reserve System and new benchmarks on which the committee would depend when making its choices in September this year. The markets predict a hike in the base rate by three-quarters of a percentage point, and if this happens, the demand for risky assets may surge dramatically. At the moment, the federal funds rate is forecast to rise at 3.3 percent by the end of the year, which implies that following this week's meeting, by the end of December, rates may increase by around 100 basis points, which may be viewed as a milder monetary policy for the second half of this year. The head of the Fed may state that he is open to a softer increase in interest rates by 0.5 percent in September, but he will do this only when he sees indicators of a slowdown in inflation towards the conclusion of this summer.This will happen if economic development slows down and commodity prices decline. Until then, all the Fed's efforts will not have such a substantial effect, and it will have to hike rates more in the expectation of lowering inflation, which updates its top number every month.
As for the reports, today we are waiting for numbers from Boeing and Shopify, who will disclose their quarterly results before the start of the regular session. Qualcomm, Ford, and Meta Platforms will report at the end of the day. To date, more than 150 businesses from the S&P500 have reported. According to FactSet, nearly 70 percent of them exceeded experts' estimates.
As I said above, investors experienced some optimism after Alphabet shares increased by about 4 percent on the background of the published quarterly report of the technological giant. And although better revenue growth from Google was reported, nevertheless, the company's total profit and revenue were below forecasts.
Microsoft shares also surged by 3.7 percent despite the company's profit and revenue being below analysts' projections.
As for the technical image of the S&P500
Bulls suffered another defeat yesterday, but throughout today's gap, trading continues to be performed above the $3,940 level, preserving the chances of a market rebound following the Federal Reserve meeting.
For buyers to declare their intentions more seriously, they need to bring the $3,975 range under control as soon as possible, shifting the focus to the resistance of $4,013, which they failed to go over last week. This is the only way we will see reasonably active growth of the index in the vicinity of $ 4,050 when significant sellers will come to the market again. At a minimum, there will be those who wish to lock in profits on long bets. A more distant aim will be the $4,089 level. In the case of a resumption of the pressure generated as a result of weak business reports, purchasers will have to defend the nearest support of $3,942, the breakthrough of which will drive the index back to $3,905. Having missed this level, the index will decline to $3,835. A little lower, there is a more stable level of $3,801, where buyers will again begin to engage more actively.