WASHINGTON (dpa-AFX) - Following the rally seen in the previous session, stocks are likely to show a lack of direction in early trading on Wednesday. The major index futures are currently pointing to a roughly flat open for the markets, with the Dow futures up by just 16 points.
Traders may be reluctant to make any significant moves ahead of the Federal Reserve's highly anticipated monetary policy announcement this afternoon.
The Fed is widely expected to leave interest rates unchanged, but traders will closely scrutinize the accompanying statement for clues about a potential rate cut in the near future.
Fed Chairman Jerome Powell's recent pledge to 'act as appropriate' to sustain the U.S. economic expansion amid signs of a slowdown due to the U.S.-China trade war has led to speculation the Fed could cut rates as soon as July.
President Donald Trump has been urging the Fed to cut rates and added further pressure in remarks to reporters on Tuesday by suggesting he would consider demoting Powell if the central bank does not act.
'Well, let's see what he does,' Trump said when asked if he still wants to demote Powell. 'They're going to be making an announcement pretty soon, so we'll see what happens.'
Trump cited European Central Bank President Mario Draghi's recent remarks hinting at additional stimulus, which the president has described as 'unfair to the U.S.'
'I can tell you that Draghi and the EU, if you look at what's going on with the euro, they have a much different stance than our folks do,' Trump said.
Powell has denied that monetary policy decisions are impacted by politics, although some analysts accused the Fed of capitulating to Trump's demands by lowering its forecast for interest rates earlier this year.
The Fed is scheduled to announce its monetary policy decision at 2 pm ET, followed by Powell's press conference at 2:30 pm ET.
Reflecting optimism about a potential U.S.-China trade deal on top of a near-term interest rate cut by the Fed, stocks moved sharply higher during trading on Tuesday. With the rally on the day, the major averages ended the session at their best closing levels in well over a month.
The major averages ended the session well off their highs of the day but still firmly in positive territory. The Dow surged up 353.01 points or 1.4 percent to 26,465.54, the Nasdaq soared 108.86 points or 1.4 percent to 7,953.88 and the S&P 500 jumped 28.08 points or 1 percent to 2,917.75.
In overseas trading, stock markets across the Asia-Pacific region moved sharply higher during trading on Wednesday. Japan's Nikkei 225 Index shot up by 1.7 percent, while Hong Kong's Hang Seng Index spiked by 2.6 percent.
Meanwhile, the major European markets have moved to the downside on the day. While the French CAC 40 Index has edged down by 0.1 percent, the German DAX Index is down by 0.2 percent and the U.K.'s FTSE 100 Index is down by 0.4 percent.
In commodities trading, crude oil futures are edging down $0.01 to $53.89 a barrel after soaring $1.97 to $53.90 a barrel on Tuesday. Meanwhile, after climbing $7.80 to $1,350.70 an ounce in the previous session, gold futures are falling $3 to $1,347.70 an ounce.
On the currency front, the U.S. dollar is trading at 108.46 yen compared to the 108.45 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.1203 compared to yesterday's $1.1194.
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