By Joe Wallace
U.S. stock futures edged higher Wednesday as investors awaited cues on the Federal Reserve's next steps to bolster the economy, a flurry of earnings at major companies, and a congressional grilling of the biggest technology companies' leaders.
Futures tied to the S&P 500 ticked up 0.2%, suggesting the broad index may open higher. The S&P 500 fell for the third time in four trading days Tuesday, after several companies reported a larger hit to earnings than investors were anticipating.
The Fed isn't expected to roll out new stimulus measures when it wraps up its two-day policy meeting, but policy makers are debating how to provide more support to the economy once the outlook becomes clearer. Officials have warned that the economy faces a deeper downturn if the country doesn't take more effective action to slow coronavirus.
The central bank is due to publish its decision at 2 p.m. ET, followed by a press conference by Chairman Jerome Powell. The Fed on Tuesday said it would extend emergency lending programs that had been set to run through September by an additional three months to keep propping up activity during the pandemic.
The extension is "of utmost importance," said Samy Chaar, chief economist at Swiss private bank Lombard Odier. "You continue to need very, very significant support from monetary authorities and fiscal authorities."
The world economy will operate at 90% capacity until a vaccine removes the need for social distancing and other prevention measures, according to Mr. Chaar. Although aggressive economic stimulus justifies the stock market's recovery since March, "the potential from here seems limited," he said.
The dollar slipped ahead of the Fed's decision. The WSJ Dollar Index, which tracks the U.S. currency against those of major trading partners, fell 0.1%, extending its decline this month to 3.2%.
In bond markets, the yield on 10-year U.S. Treasury notes ticked up to 0.594%, from 0.581% Tuesday.
Ahead of the opening bell in New York, shares in General Electric rose 1.3% after the industrial conglomerate said it burned through less cash in the June quarter than it had previously warned. General Motors reported a smaller loss than analysts had expected, boosting its shares 3.5%. Spotify Technology shares fell 3.4% after the music-streaming company's net loss widened.
Shares in L Brands jumped 20% after the embattled retail company said it plans to lay off about 850 corporate employees. Advanced Micro Devices rose more than 10% after the chip maker reported higher second-quarter earnings and lifted its full-year sales forecast. Shares of Starbucks advanced around 6% after the coffee chain said it expects the worst effects of the virus to moderate in the current quarter.
Earnings at major U.S. companies have so far beaten the gloomy expectations of analysts. Just over a third of firms on the S&P 500 had reported through Tuesday, and posted a 38% decline in earnings per share on average from a year before, according to FactSet. Still, 78% of firms topped forecasts.
International markets were mixed. Stocks wavered in Europe amid a rush of quarterly reports, and the regional Stoxx Europe 600 edged up 0.1%. China's Shanghai Composite Index advanced 2.1% by the close of trading, and Japan's Nikkei 225 fell 1.2%.
Shares in Barclays were among the worst performers in Europe, dropping 6.6% after the U.K. bank reported a 91% slump in second-quarter profit. Kering, owner of Italian fashion house Gucci, gained 5% after saying online sales had accelerated even as overall revenue slumped in the first half.
Investors will also follow the appearance of the chief executives of Amazon.com, Apple, Facebook and Google before the House Antitrust Subcommittee. The committee is investigating the market dominance of online platforms, which have powered the stock market higher from its March lows.
"This is something extraordinarily significant: how do you want to regulate the tech industry?" said Mr. Chaar. "We won't have an answer today at the hearings."
Write to Joe Wallace at Joe.Wallace@wsj.com
