(Reuters) – U.S. stock index futures rose on Wednesday, after Wall Street’s main indexes fell sharply in the previous session, with markets also awaiting comments from Federal Reserve Chairman Jerome Powell amid recent speculation over negative interest rates.
Futures traders began pricing in the possibility of negative rates last week and President Donald Trump piled pressure on the Fed again on Tuesday, as the economy reels from the impact of the coronavirus pandemic.
However, several members of the U.S. central bank have recently said they do not see a need for borrowing costs, now near zero, to move into negative territory. Powell’s webcast address is expected to start at 9 a.m. ET (1300 GMT).
“Powell will probably reaffirm that negative rates are not on the cards, putting him on another collision course with the President,” said Raffi Boyadjian, senior investment analyst at XM.
“Depending on how strongly Powell rejects the possibility of negative rates, Wall Street looks vulnerable to sell offs.”
Unprecedented monetary and fiscal stimulus actions as well as hopes of an economic recovery have been vital in helping the three main U.S. stock indexes rise about 30% from their March lows.
However, the rally paused this week as a spike in cases in Germany, South Korea and China and a warning from a top U.S. health expert spurred worries of a second wave of coronavirus infections as lockdowns are slowly lifted in several countries.
At 8:15 a.m. ET, Dow e-minis were up 163 points, or 0.69%. S&P 500 e-minis were up 19.25 points, or 0.67% and Nasdaq 100 e-minis were up 76.75 points, or 0.85%.
Generic drugmaker Mylan NV rose 1.7% premarket after it signed a licensing agreement with Gilead Sciences Inc for Gilead’s remdesivir drug, which recently received the U.S. Food and Drug Administration’s emergency use authorization to treat COVID-19 patients.
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