US pre-market: stocks steady before Warsh's first Fed decision, chips weigh on Nasdaq
US stock futures are slightly higher before the open, with S&P 500 futures up about 0.1% and Nasdaq 100 futures up around 0.6%. The market is waiting on one thing: the Federal Reserve's rate decision at 2:00pm ET, the first under new Chair Kevin Warsh. Almost nobody expects a rate move. The funds range sits at 3.50% to 3.75% and futures price roughly 98% odds of no change, so the focus is on the updated projections and Warsh's first press conference at 2:30pm ET.
The Dow closed at a record on Tuesday while the Nasdaq fell more than 1%, as money moved out of expensive technology and into financials and cyclicals.
What's driving the setup
The Fed dominates everything else today. With the decision treated as a near-certain hold, traders are positioned for the guidance rather than the headline: the dot plot, any change in the statement's language, and the tone Warsh sets in his debut. He took office as the 17th Chair on May 22, so his communication style is still an unknown, and that alone is enough to keep most desks sidelined into the afternoon.
Before any of that, May retail sales land at 8:30am ET. It is the last real read on the US consumer before the Fed speaks, and a hot or cold print could nudge rate expectations at the margin ahead of 2:00pm.
Overnight in Asia and Europe
Asia was mixed. Japan's Nikkei 225 added around 0.6% and traded just below 70,000, close to the record it set on Tuesday, supported by strong AI-related semiconductor exports and follow-through from the Bank of Japan's recent hike to 1%. Hong Kong's Hang Seng fell about 0.8% as Chinese technology and internet names stayed under pressure and recent data pointed to soft domestic demand. Mainland China's Shanghai Composite was roughly flat.
Europe was quiet near record levels. The STOXX 600 was little changed, with banks and cyclicals firmer and healthcare softer, while Germany's DAX slipped slightly and the FTSE 100 traded flat, held back by its heavy energy weighting as oil fell.
Tuesday's rotation: chips down, Dow up
The selloff was concentrated in semiconductors. Intel (INTC.US) and Advanced Micro Devices (AMD.US) both fell more than 7%, and Marvell (MRVL.US) dropped close to 10%, unwinding part of a sharp run earlier in the week. The driver was sector rotation, not company news: with the AI-spending trade looking stretched, investors trimmed chips and added to financials and other rate-sensitive cyclicals, which is how the Dow set a record on the same day the Nasdaq sold off. This morning the chip group is trying to steady, and Nasdaq 100 futures pointing higher reflect that early bounce attempt.
Oil and the US-Iran backdrop
Crude has slid hard, with Brent back in the high-$70s after dropping more than 5% the prior session, as markets price in progress on a US-Iran framework and reduced risk around the Strait of Hormuz. Lower oil eases the near-term inflation picture, which is part of why money has favored rate-sensitive sectors. For energy producers and energy-heavy indices like the FTSE 100, the same drop in crude is a direct drag on index-level earnings.
US economic calendar today (ET)
- 8:30am: May retail sales, the key pre-Fed read on consumer demand.
- 2:00pm: FOMC rate decision and updated economic projections.
- 2:30pm: Chair Kevin Warsh's first post-meeting press conference.
What to watch
The decision itself is unlikely to surprise. The reaction will hinge on the projections and on how Warsh frames the inflation-versus-jobs balance in his first outing, since any shift in the expected rate path is what would move markets. On the equity side, the open question is whether this morning's tech bounce holds or whether the rotation out of chips and into cyclicals has further to run. Retail sales at 8:30am is the early swing factor before attention turns fully to the Fed.
Context only, not financial advice. Track your own trades with Swingfolio.