Wall Street eyes more gains on Fed's crucial day

U.S. stock index futures indicated a higher open on Wednesday, with Dow futures up about 100 points in pre-market trading ahead of the expected Federal Reserve interest rate rise.

The Fed kicked off its meeting Tuesday, and will release its post meeting statement Wednesday at 2 p.m. ET, followed by a press conference hosted by Fed Chair Janet Yellen at 2:30 p.m.

Traders work on the floor of the New York Stock Exchange.
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Traders work on the floor of the New York Stock Exchange.

The central bank is widely expected to raise the fed funds rate by a quarter point Wednesday, while emphasizing that the pace of tightening will be gradual. A hike would be the first since June 2006.

"So, the conclusion of the final Federal Open Market Committee (FOMC) meeting for 2015 this evening looks set to finally bring lift-off for fed funds rate, with the likely 25 basis point hike to 0.25-0.50 percent set to be the first increase since 2006," said economist at Daiwa Capital Markets, Emily Nicol.

"Expectations, however, are for a 'dovish tightening', with the post-meeting statement and updated economic forecasts set to signal the likelihood of a slow pace of further hikes going forward. Indeed, 'the dot-plots' of FOMC member views seem likely to see the median expectation for the fed funds rate at end-2016 pushed lower by 25 or 50bps from the range of 1.25-1.50 percent signaled in September, and the median expectations for future years pulled lower too," she added.

Housing starts rose 10.5 percent in November, while building permits rose 11 percent.

U.S. industrial production saw its sharpest decline in more than three and a half years in November as utilities dropped sharply, a sign of weakness that could moderate fourth-quarter growth.

Industrial output slipped 0.6 percent after a downwardly revised 0.4 percent dip in October, the Federal Reserve said in a Reuters report Wednesday, marking the third straight month of declines. Capacity utilization was 77.0 percent.

Flash Manufacturing PMI is also due at 9:45 a.m.

Joy Global posted quarterly results before market open. FedEx and Oracle are due after the bell.

Oil prices fell sharply again on Wednesday, with internationally traded Brent down more than 1.5 percent, or 63 cents, around $37.80 a barrel while U.S. crude fell 20 cents to near $37.15 per barrel.

Oil prices have fallen by about two-thirds since mid-2014, with Brent crude on Monday flirting with its lowest level since 2004 at just above $36 a barrel.

In Europe, equities traded slightly higher ahead of the Fed rate decision.

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U.S. stocks closed higher Tuesday, supported by stabilization in oil prices and high expectations for the first rate hike in nine years.