U.S. stock index futures were subdued on Wednesday as investors stuck to the sidelines ahead of commentary by Federal Reserve Chair Jerome Powell that could offer more clarity on the direction for interest rates.
Wall Street has kicked off November on a high note, with the the S&P 500 and the Nasdaq notching their longest streak of gains in two years on Tuesday as Treasury yields retreated sharply amid expectations that the Fed has reached the end of its tightening campaign.
Markets are now pricing in rate cuts as soon as in May, according to the CME Group's FedWatch tool, with odds of a cut of at least 25 basis points having risen to nearly 52% compared to about 41% a week ago.
However, guarded comments from several central bank officials over the past few days have kept investors on edge, with Fed Governor Michelle Bowman flagging the possibility of further rate hikes given the strength of the U.S. economy.
All eyes will be on Powell's opening remarks before the Federal Reserve Division of Research and Statistics Centennial Conference at 9:15 a.m. ET (1415 GMT) for more clues on how long U.S. monetary policy could stay restrictive.
The Fed Chair is also due to speak at another conference on Thursday.
"Stocks may well pause for breath as investors balance the hope for rate cuts with building financial stresses in the economy," Derren Nathan, head of equity research at Hargreaves Lansdown, said in a note.
"And it wouldn’t be the first time ... that the market has been wrong about the timing of the Fed pivot."
The benchmark U.S. ten-year Treasury yield was steady at 4.5728%, well below the 5% level breached in October.
Analysts have mixed views about the outlook for equities towards the end of the year, with some cautiously optimistic about the prospects of a rally while others have highlighted the likelihood of economic growth concerns and tepid earnings forecasts keeping sentiment subdued.
Warner Bros Discovery and Biogen are among major Wall Street companies set to post quarterly results before the opening bell.
At 5:19 a.m. ET, Dow e-minis were down 7 points, or 0.02%, S&P 500 e-minis were down 2.25 points, or 0.05%, and Nasdaq 100 e-minis were down 11.25 points, or 0.07%.
Among major movers, electric vehicle maker Rivian Automotive climbed 6.8% premarket after raising its full-year production forecast, while smaller rival Lucid Group fell 4.0% after trimming its production outlook.
Take-Two Interactive Software rose 8.6% on a report stating its division Rockstar Games plans to announce the next "Grand Theft Auto" game as early as this week.
Shares of Spirit AeroSystems tumbled 14.3% after the embattled aerospace supplier announced new measures to raise capital.
(Reporting by Amruta Khandekar; Editing by Maju Samuel)
