Major U.S. stock indexes dropped more than 1% on Tuesday as regional bank shares tumbled on renewed fears over the financial system and as investors tried to gauge how much longer the Fed may need to hike interest rates.
Regional lenders such as PacWest Bancorp (PACW.O) and Western Alliance Bank (WAL.N) extended losses in premarket trading on Wednesday, with their shares down 1.7% and 3.0%, respectively.
While the Fed is widely expected to deliver a 25-basis point interest rate hike, investor focus will be on cues if further hikes are on the cards given inflation remains above the U.S. central bank's 2% target level.
"The Fed may want to deliver as little in the way of guidance as possible, keeping the door open for a pause or even an additional hike," Saxo Bank analysts said.
Major global central banks have embarked on an aggressive interest rate hike campaign, with the Fed already having hiked its benchmark rates nine times by 475 basis points to a range of 4.75%-5.00% since March 2022.
Ahead of the Fed's policy decision at 2 p.m. ET (1800 GMT), investors will monitor private payrolls data as well as surveys on U.S. services sector activity in April.
Meanwhile, top U.S. Senate Republicans on Tuesday called on President Joe Biden to accept their party's debt-ceiling package or make a counter-offer, while a top Democrat said the Senate might try to advance a "clean" debt-ceiling hike next week.
At 7:10 a.m. ET, Dow e-minis were up 35 points, or 0.10%, S&P 500 e-minis were up 7.5 points, or 0.18%, and Nasdaq 100 e-minis were up 23.25 points, or 0.18%.
Analysts expect quarterly earnings for S&P 500 companies to decline 1.4% from a year earlier, according to IBES data from Refinitiv, compared with a 5.1% drop expected at the start of April.
Advanced Micro Devices (AMD.O) slumped 7.7% after the chipmaker forecast quarterly sales below estimates due to a weak PC market, pushing rival Intel Corp (INTC.O) up 1.5%.
Eli Lilly and Co (LLY.N) gained 6.1% as an experimental Alzheimer's drug developed by the company slowed cognitive decline by 35% in a closely watched late-stage trial.
Estee Lauder Cos Inc (EL.N) slid 9.9% as the MAC lipstick maker forecast a bigger drop in full-year sales and profit on a slower-than-expected recovery in Asia travel retail and major market China.
