U.S. stock futures rose on Wednesday, suggesting a higher open on Wall Street before the start of the Federal Reserve's two-day policy meeting, with energy shares set to lead the way.
Before Wednesday's opening bell, investors got positive company news, including stronger-than-expected earnings from spice company McCormick & Co. Inc. and a brokerage upgrade on shares of retailer Limited Brands Inc.
The rise in futures followed a sharp drop by stocks in the previous session because of concerns the Fed's credit tightening will slow economic growth and hurt corporate profits. The Dow industrials suffered their worst one-day percentage loss in more than three weeks on Tuesday.
U.S. crude for August delivery rose 10 cents to $72.04 a barrel in electronic trading amid concern about heavy U.S. demand for gasoline before the July 4 Independence Day holiday.
It looks like we may get a bounce at the open, said Peter Cardillo, chief market analyst at S.W. Bach & co. in New York.
Oil is trading a bit higher. We have oil inventory data coming out, and oil stocks would get a boost at the beginning, but what we would also see is the market going into Fed watch.
S&P 500 futures rose 3.30 points, above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract.
Dow Jones industrial average futures added 27 points and Nasdaq 100 futures were up 3 points.
The U.S. central bank is expected to lift its benchmark fed funds rate by a quarter point to 5.25 percent on Thursday at the end of the meeting.
Some analysts have speculated the Fed and its new chairman, Ben Bernanke, might decide on a more dramatic half-point increase in the rate, followed by a pause in future hikes.
Warner Music Group fell in European trading after Britain's EMI Group Plc rejected Warner's $4.6 billion counter-bid.
Oil analysts expect U.S. government weekly inventory data due at 10:30 a.m. (1430 GMT) will show crude oil inventories fell.
Merrill Lynch on Wednesday revised up its price forecast for U.S. crude to $68.25 a barrel for the second half of 2006 from $65.50.
The Merrill report is certainly going to help the energy sector, but if crude oil futures are moving higher that won't be good for other areas of the market, said Evan Olsen, head of equity trading at Stephens Inc. in Little Rock, Arkansas.
Nike Inc. , the athletic shoe maker, will also be in focus after it posted a 5 percent drop in quarterly profit and said heavy spending on World Cup marketing would weigh on results.
Retailer J. Crew Group Inc. will make its market debut after pricing an initial public offering on Tuesday worth $376 million. It will trade on New York Stock Exchange under the ticker symbol JCG.
Matrix Investment raised its rating on Limited Brands.