Wall St eyes higher open on upbeat results ahead of Fed decision

U.S. stocks were set to open higher on Wednesday following positive earnings from companies including Starbucks and Advanced Micro Devices (NASDAQ:AMD), while investors braced for the biggest U.S. interest rate hike since May 2000.

Advanced Micro Devices Inc rose 6.7% in premarket trading after the chipmaker forecast stronger-than-expected full-year and second-quarter revenue on data center boom. Rival Nvidia (NASDAQ:NVDA) Corp added 1.8%.

Starbucks Corp (NASDAQ:SBUX) gained 6.8% after the coffee chain posted upbeat quarterly revenue.

Moderna (NASDAQ:MRNA) Inc climbed 6.1% after the drugmaker forecast higher COVID-19 vaccine sales in the second half of the 2022 than the first.

Traders are pricing in expectations of a 50 basis points (bps) rate hike and announcement of the start of reductions to its $9 trillion balance sheet when the Fed releases its statement at the end of its two-day policy meeting at 2 p.m. ET (1800 GMT).

The spotlight will, however, be on Fed Chair Jerome Powell’s news conference for fresh clues on how far and how fast the U.S. central bank is prepared to go in an effort to bring down decades-high inflation.

“The (50 bps hike) is baked into the market. What maybe isn’t is what’s the eventual end point here,” said Josh Wein, portfolio manager at Hennessy Funds.

“The market is still adjusting to this inflation story and the need for the Fed to be proactive. We’re in very strong position and it’s easy to lose sight of the fact that companies are in very good shape in aggregate and several rate hikes doesn’t undo that dynamic.”

Concerns about a hit to economic growth due to a hawkish Fed, mixed earnings from some big growth companies, the conflict in Ukraine and pandemic-related lockdowns in China have hammered Wall Street recently, with richly valued growth stocks bearing the brunt of the sell-off.

Bearish sentiment, or expectations that stock prices will fall over the next six months, rose sharply to 59.4% in the latest survey by the American Association of Individual Investors. The last time bearish sentiment went above that level was in March 2009 during the financial crisis.

At 8:26 a.m. ET, Dow e-minis were up 102 points, or 0.31%, S&P 500 e-minis were up 13 points, or 0.31%, and Nasdaq 100 e-minis were up 26.5 points, or 0.2%.

The first-quarter reporting season is in full swing. Of the 329 companies in the S&P 500 that have reported earnings as of Tuesday, 81.2% have topped analyst expectations according to Refinitiv estimates.

Livent (NYSE:LTHM) Corp surged 22.3% after it posted a better-than-expected quarterly profit and bolstered its 2022 revenue outlook on higher demand for lithium used in electric vehicle batteries.

Airbnb Inc climbed 5% after the vacation rental firm projected upbeat second-quarter revenue, betting on pent-up travel demand after COVID-19 curbs were eased globally.

Meanwhile, data showed U.S. private payrolls increased less than expected in April, likely restrained by persistent worker shortages. The Labor Department’s more comprehensive and closely watched employment report is due on Friday.