Stock futures inch higher ahead of Fed's big rate decision

cnbc.com:

Stock futures inched higher in overnight trading as investors braced for the Federal Reserve's big interest rate decision on Wednesday, where the central bank is widely expected to hike rates by half a percentage point.

Futures on the Dow Jones Industrial Average were flat. S&P 500 futures inched 0.17% higher, and Nasdaq 100 futures rose 0.3%.

Markets are preparing for a hawkish Fed, and the central bank is also expected to announce a plan to cut its roughly $9 trillion balance sheet by $95 billion a month, beginning in June.

Respondents to the May CNBC Fed Survey indicated they expect the central bank to announce the long-anticipated 50 basis point hike on Wednesday, followed by a second one in June as it looks to cut its balance sheet. The majority of respondents also expect a recession at the end of the tightening cycle, the survey found.

«We're at a place right now where the market's pricing in that inflation is going to be back near pre-pandemic levels within two years with only modest Fed tightening,» said Rebecca Patterson, Bridgewater's chief investment strategist, on CNBC's «Closing Bell» on Tuesday. «We think that either the Fed is going to have to tighten more than expected to get inflation to their target or inflation is going to be higher than expected.

Meanwhile, Lyft plummeted 25% in extended trading on Tuesday after the ridesharing company shared weak guidance for the current quarter as it expects to invest in driver supply. Airbnb rose 3.6% as the company expects a continued travel rebound, and Starbucks added 2.4% after topping revenue estimates.

In Tuesday's regular trading session the Dow Jones Industrial Average added 0.20%, and the S&P 500 gained 0.48%. The tech-heavy Nasdaq Composite rose 0.22%.

Th