In premarket trading, futures for the S&P 500 were up 0.1%, while futures for the Dow Jones Industrial Average were essentially flat. Nasdaq futures rose 0.3%.
Most analysts expect the Fed to keep its benchmark borrowing rate around 4.3% and again cite uncertainty around the economic impacts of President Donald Trump’s widespread tariff increases on imports to the U.S.
However, there have been hints of dissent from Trump-appointed Fed governors Christopher Waller and Michelle Bowman, underscoring a difference of opinion about how the U.S. economy is doing. Unemployment is low but hiring has been sluggish. Overall economic growth has been modest in the first six months of the year and inflation ticked up in June, largely because of tariffs.
Most economists, and Fed officials, think that a rate cut could make inflation worse.
Waller’s position, which he has spoken about publicly, is that labor market growth is stalling and the Fed should not wait for further deterioration to cut interest rates. The government will issue its latest jobs report on Friday, with analysts forecasting that U.S. nonfarm employers added 115,000 jobs in July, down from June’s surprisingly strong 147,000.
Trump has also been vocal about his desire for a rate cut, saying it would boost an already strong economy. Trump’s theory runs counter to most economists, who say that a healthy, growing economy doesn’t need rate cuts.
The Fed will announce its interest rate policy decision Wednesday afternoon before markets close.
In overnight equities trading, Starbucks shares rose more than 5% after the retail coffee giant said it’s confident that improved store operations and new products — including a cold foam protein drink — will soon help turn around the company’s lagging U.S. sales. Starbucks beat Wall Street’s third-quarter sales targets but missed profit forecasts as same-store sales fell 2%.
Elsewhere, global markets were mixed after the U.S. and China ended their latest round of trade talks without a deal.
Beijing’s top trade official said China and the United States agreed during two days of talks in Stockholm, Sweden, to work on extending an Aug. 12 deadline for imposing higher tariffs on each other. The U.S. side said an extension was discussed, but not decided on.
Treasury Secretary Scott Bessent said Trump would make that call. If there is no extension, tariffs could “boomerang” back to higher levels, he said.
China’s powerful Politburo met Wednesday and promised help for companies hit by trade shocks, but held back on any specific large government spending commitments.
“It did leave the door open to more support being introduced in future, but the urgency around stimulus appears to have diminished as trade tensions have eased,” Julian Evans-Pritchard of Capital Economics said in a report.
Hong Kong’s Hang Seng index shed 1.4% to 25,176.93, while the Shanghai Composite index gained 0.2% to 3,615.72.
Tokyo’s Nikkei 225 index fell less than 0.1% to 40,654.70. Gains for electronics companies were offset by losses for major exporters like Toyota Motor Corp. and Honda Motor Co.
Australia’s S&P/ASX 200 climbed 0.6% to 8,756.40 and in South Korea, the Kospi gained 0.7% to 3,254,47.
Taiwan’s Taiex rose 1.1%. In India, the Sensex added 0.2%.
In Europe, new data showed the trading block’s economy barely grew in the April-June quarter as frantic earlier efforts to ship goods ahead of new U.S. tariffs went into reverse and Germany’s economy contracted.
The outlook for coming months is mediocre given the 15% tariff imposed on European goods in the U.S. under a EU-U.S. trade deal announced Sunday. The higher tariff will burden European exports with higher costs to either be passed on to U.S. consumers or swallowed in the form of lower profits.
Germany’s DAX rose 0.1%, while the CAC 40 in Paris gained 0.4%. Britain’s FTSE 100 shed 0.4%.
A Friday deadline is looming for many of Trump’s proposed tariffs on other countries.
In energy trading Wednesday, U.S. benchmark crude oil shed 29 cents to $68.92 per barrel, while Brent crude, the international standard, gave up 31 cents to $71.37 per barrel.
The dollar fell to 148.30 Japanese yen from 148.48 yen. The euro slipped to $1.1531 from $1.1546.
