A Surge in Stock Futures, Fed Rate Anticipation

US stock futures increased by Wednesday morning as investors awaited the Federal Reserve’s latest move.

Dow Jones Industrial Average Future increased by 0.22% or 73 points. Nasdaq 100 and S&P 500 were increased by 0.03% and 0.21%, respectively.

Ford Motor subdued analysts’ expectations for the top and bottom performance last quarter, also a coffee chain. However, both stocks fell after hours.

The major averages posted a second consecutive losing session on Tuesday. The Dow Jones Industrial Average declined by 1.08% or 36.17 points. The S&P 500 is down by 1.16%, while the Nasdaq Composite declined by 1.08%.

Continued fears of contagion from the regional banking sector weighed heavily on markets following the collapse of First Republic Bank and its takeover by JPMorgan. This comes before the Federal Reserve’s recent decision, with investors pricing in a roughly 85% chance of a rate increase, said CME Group’s FedWatch.

“There is still pain all through the sector,” iCapital’s Anastasia Amoroso told CNBC’s “Closing Bell: Overtime” on Tuesday. “the reason I think bank stocks should be really important to the Fed is that, at the last FOMC meeting, Fed Chairman Powell gave us some new metrics to watch to see if interest rates will go up or not. And that’s the extent of the credit crunch happening in the economy.

As the corporate earnings season continues, CVS Health, Spirit AeroSystems, and Yum Brands will report earnings on Wednesday before the opening.

On the economic front, traders eagerly await the latest April ADP jobs data. Economists enrolled by Dow Jones expect jobs to increase by 133,000 over the past month. That would be down from the 145,000 increase in jobs in the previous month.

S&P Global US service will also receive PMI data for April. It is expected to post a reading of 53.7 last month, in line with the previous month.

According to the consensus estimate of Dow Jones, the ISM non-manufacturing PMI data for April should be 51.8. It is above last month’s reading of 51.2.

Mild Recession and Federal Reserve

Investors have been bidding on the shares since mid-March because they thought the Fed would change policy and cut interest rates by half a percentage point in response to a mild recession, according to BofA.