U.S. stock index futures edged up on Wednesday after a four-day run of gains ahead of the conclusion of the U.S. Federal Reserve’s two-day policy meeting.
The Fed is set to announce its monetary policy decision at 12:30 p.m (ET) and many economists expect the central bank to extend its “Operation Twist,” a program aimed at pushing down longer-term interest rates in an attempt to support the economy.
The S&P 500 has advanced in four straight sessions on hopes for an extension of stimulus measures not only from the Fed but from European policymakers as well, pushing the benchmark index to its highest level since May 10 and above its 50-day moving average for the first time in seven weeks.
“We could see a bit of a disappointment (from the Fed); however, Operation Twist will be extended and the real question is will the Fed still say the economy is still on good footing or is weakening because of the euro crisis,” said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.
“Basically the question is how much of a decline will the economy suffer if the euro crisis continues, so the emphasis will remain on the euro crisis.”
Greek parties reached a deal to form a conservative-led coalition and said they would start immediately to form a team to re-negotiate the tough austerity conditions in the international bailout propping up the near-bankrupt economy.
Europe won support from world leaders on Tuesday for an ambitious but slow-moving overhaul of the euro zone, even as pressure built in financial markets for quicker solutions to its debt crisis that threatens the world economy.
European shares extended the previous session’s strong gains in choppy trading on Wednesday, led by cyclical stocks, ahead of the Fed announcement. The FTSEurofirst 300 index of top European shares was up 0.2 per cent.
S&P 500 futures rose 1.6 points and were slightly above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures gained 24 points, and Nasdaq 100 futures added 7 points.
Procter & Gamble Co. forecast annual earnings for its coming fiscal year would be between flat and up by a mid-single digit percentage amount, with underlying sales set to show a 2 to 4 per cent increase. Shares fell 2.4 per cent to $60.69 in premarket trade.
Adobe Systems Inc. dropped 7 per cent to $30.59 in premarket after the maker of Photoshop and Acrobat software cut its full-year revenue outlook as weak demand in Europe could affect sales of the recently launched versions of its popular design software.
PepsiCo said it sees unfavorable exchange rates hurting 2012 profit more than the maker of Frito-Lay snacks, Quaker oatmeal and Tropicana orange juice had previously expected.
S&P 500 companies expected to post earnings include from Bed Bath & Beyond Inc, Goodrich Corp and Red Hat Inc .
Asian shares rose on Wednesday as investors bet that Europe’s worsening debt crisis and faltering global growth will prompt major central banks to launch a new round of monetary stimulus.