Wall Street eyes higher open ahead of Fed meeting By Reuters

2/2© Reuters. FILE PHOTO: Traders work on Ausforex official websitethe floor of the New York Stock Exchange (NYSE) in New York City, U.S., March 14, 2022. REUTERS/Brendan McDermid2/2

By Devik Jain and Sabahatjahan Contractor

(Reuters) -U.S. stocks were set to open higher on Tuesday ahead of the Federal Reserve's two-day policy meeting as oil prices extended their declines, with investors also assessing the fallout of fresh COVID-19 restrictions in China.

Traders see a 91% chance of a 25 basis point rate hike by the U.S. central bank at the conclusion of its meet on Wednesday. However, focus likely will be on projections showing just how far policymakers think rates will need to rise this year and in 2023 and 2024 to tame inflation.

"We've been talking about the interest rate hikes for about a year now. So to finally get it tomorrow and to put it in the rear-view mirror would be a good thing for the market," said Christopher Grisanti, chief equity strategist at MAI Capital Management in New York.

"There's space for the Federal Reserve to say yes, we're worried about inflation, but we're going to watch carefully and language like that would also be bullish."

Data on Tuesday showed U.S. producer prices rose solidly in February, and further gains are likely from higher prices of crude oil and other commodities following Russia's invasion of Ukraine.

Big banks, set to benefit from the first rate hike since 2018, rose in premarket trading, with JPMorgan Chase & Co (NYSE:JPM) advancing 0.6%. Megacap growth names Amazon.com (NASDAQ:AMZN) and Meta Platforms Inc added 0.9% each to lead gains among the tech titans.

Delta Air Lines Inc (NYSE:DAL) and United Airlines jumped 7.4% and 6.3%, respectively, after the U.S. carriers raised their current-quarter revenue forecasts, even as they trimmed capacity.

Meanwhile, a steep jump in daily COVID-19 infections in China, along with a lack of progress in Ukraine-Russia talks to end their weeks-long conflict kept investors on edge.

The Kremlin said it was too early to make predictions about the possible results.

Occidental Petroleum Corp (NYSE:OXY) fell 5% in premarket trading to lead losses among oil and gas producers. Crude prices slid to $100 a barrel as curbs in China weighed on demand outlook, after scaling as much as $139 last week on fears of supply disruptions following Western sanctions on Russian oil. [O/R]

"There is some good news. Oil is down a lot today, but I don't think the market will get any longer-term direction until there's some clarity on the Ukrainian invasion and how that's going to play itself out," Grisanti added.

At 8:47 a.m. ET, Dow e-minis were up 134 points, or 0.41%, S&P 500 e-minis were up 21.75 points, or 0.52%, and Nasdaq 100 e-minis were up 104.75 points, or 0.8%.

The CBOE volatility index, also known as Wall Street's fear gauge, rose for a third straight session.

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