Stock futures increase ahead of Fed announcement

In early trading on Wednesday, the U.S. stock futures rose as investors geared up for the Federal Reserve’s announcement later in the day.

The S&P 500 futures rose 0.4%, Dow Jones Industrial Average futures climbed 0.3%, while Nasdaq futures rose 0.2%.

The better-than-expected earnings of Adobe and FedEx which were reported after the bell boosted sentiment. Following the earnings release, Adobe rose 1.9% after hours, while FedEx rallied more than 9% in premarket trading. The shipping company reported beyond-expectations results in the quarter with its earnings beating analysts’ estimates at $2.18 per share.

Positive economic data are seen in the United States and China on Tuesday also boosted sentiment.

Federal Reserve chairman, Jerome Powell, earlier unveiled a policy shift which will encourage higher tolerance for inflation, and effectively work towards keeping interest rates lower for a longer period of time. Investors are hopeful that the central bank will maintain a stand on the economy. Wednesday also marks the second day of the Fed’s policy meeting since the official unveiling of the policy.

“The Fed doesn’t like to be involved in politics, even though it’s inherently a political institution but two months before an election is a very difficult time to put your politics aside,” said chief market strategies at Jefferies David Zervos.

The Federal Open Market Committee will provide a quarterly update on the committee’s estimates for GDP, inflation, and unemployment. The central bank may also provide clear guidance on what will be required to increase the rates in the future.

The Dow closed up marginally on Tuesday, following its gain of more than 200 points earlier in the session. The S&P 500 rose 0.5% regardless of the few financial declines.

“Optimism is being supported by a continual flow of good economic news, healthy earnings news and the prospect of getting more comforting news from the Federal Reserve tomorrow suggesting they remain committed to letting the recovery run hot while continuing to provide supportive policies,” said chief investment strategist at the Leuthold Group, in an interview with CNBC.