Wall Street futures surge ahead of Fed decision: 5 things to know before markets open

• Markets price in a 93% chance of a quarter-point Fed rate increase at 2 pm ET; the critical question is whether additional hikes will follow or if this is a one-off move.
• Oil prices eased roughly 1.5% after US crude inventories rose 7.1 million barrels, but 10-year Treasury yields remain elevated near 5%, pressuring equity valuations.
• Intel stock jumped in premarket trading on reports SK Hynix is exploring US memory-chip production, potentially leasing part of Intel's delayed Ohio facility or forming a joint venture.

Summary

Market Overview:

Wall Street futures edged higher Wednesday ahead of a critical Federal Reserve decision. S&P 500 futures rose 0.15%, Nasdaq 100 futures gained 0.3%, while Dow futures remained flat. Markets assign a 93% probability to a 25-basis-point rate hike at 2 PM ET—the Fed's first increase since 2023.

Key Concerns:

The 10-year Treasury yield hovers near 5%, pressuring equity valuations and raising inflation concerns. Investors are focused less on the expected quarter-point hike and more on Fed Chair Kevin Warsh's guidance regarding future tightening cycles.

Economic Data:

August retail sales data due at 8:30 AM ET could impact pre-opening sentiment. Economists forecast a 0.8% headline sales rebound after July's 0.6% decline, with core sales expected up 0.5%. Strong numbers could justify further Fed tightening.

Energy Markets:

Oil prices (Brent and WTI) dropped approximately 1.5% after the American Petroleum Institute reported a 7.1 million-barrel increase in US crude inventories, easing immediate supply concerns despite ongoing Middle East disruptions.

Corporate Developments:

Intel stock surged on reports of exploratory talks with SK Hynix about US memory chip production, potentially involving Intel's delayed Ohio manufacturing site. SK Hynix confirmed it's reviewing expansion options but hasn't made final decisions.

Technology Sector:

AI stocks showed mixed premarket movement. Nvidia edged higher while Microsoft and Apple dipped slightly. JPMorgan analysts suggest AI development won't materially slow, though investors are reassessing valuations in the technology sector following recent volatility.

Market Implications:

The Fed's forward guidance will determine whether this represents isolated tightening or a sustained cycle, with significant implications for both bond and equity markets.