U.S. stock indexes were set to open flat on Wednesday ahead of comments from Federal Reserve Chair Jerome Powell later in the day, while Tesla shares gained after the electric-vehicle maker’s sales in China nearly doubled.
Powell’s speech will be closely watched for signs of a slowdown in the pace of interest rate hikes by the central bank, as well as to assess the general health of the U.S. economy.
“The market is expecting him (Powell) to say maybe we won’t do the 75 bps hike … when people listen to the Fed Chair speak, they’re waiting for that little hint,” said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.
Hopes that the Fed will now hike rates in smaller increments and recent data pointing to a mild cooling in prices have positioned the benchmark S&P 500 index (.SPX) for its second straight month of gains.
The Dow Jones Industrial Average (.DJI) has gained nearly 18% in the last two months, while the Nasdaq index (.IXIC) has added about 4%.
Traders expect the Fed to increase rates by 50 basis points in December, with the rates peaking in June 2023. FEDWATCH
Tesla Inc’s (TSLA.O) shares rose 0.8% in premarket trading as its China sales in November were boosted by price cuts and incentives offered on its Model 3 and Model Y, according to data from China Merchants Bank International.
The company led gains among other growth stocks, including Apple Inc (AAPL.O), Microsoft Corp (MSFT.O) and Alphabet Inc (GOOGL.O), all of which rose between 0.3% and 0.4%.
Risk appetite was briefly boosted by a drop in yields on the two-year and the 10-year Treasury notes after the ADP National Employment report showed private employment increased by 127,000 in November, below expectations of 200,000 jobs.
The reading suggested demand for labor was cooling amid high interest rates, and comes ahead of the Labor Department’s closely watched nonfarm payrolls data on Friday. The data is expected to show 200,000 job additions in November, compared with 261,000 jobs in the prior month.
The Commerce Department’s second estimate of third-quarter gross domestic product showed the economy grew at a 2.9% annualized rate, higher than expectations of a 2.7% growth.
“A mixed bag this morning. So I don’t really make much out of that, I’d like to see what Powell has to say,” Saluzzi added.
At 8:41 a.m. ET, Dow e-minis were up 5 points, or 0.01%, S&P 500 e-minis were up 4 points, or 0.1%, and Nasdaq 100 e-minis were up 23 points, or 0.2%.
Boeing Co (BA.N) shares gained 1.3% after U.S. Senate Commerce Committee Chair Maria Cantwell drafted a proposal granting exceptions for the planemaker’s two 737 MAX variants if they include safety enhancements.
Biogen Inc (BIIB.O) jumped 4.3% after its experimental Alzheimer’s drug slowed cognitive decline in a closely watched trial.
