US stock futures were higher on the Wednesday ahead of the Federal Reserve's monetary policy decision as stocks seek to get out of their September slump.
Futures on the Dow Jones Industrial Average futures rose 200 points, or 0.6%. S&P 500 futures gained 0.5% and Nasdaq 100 futures gained 0.3%.
The S&P 500 is down 3.7% so far in September, including a 1.7% drop on Monday for its worst day since May. Key averages tried to rebound on Tuesday but failed as the Dow and S&P 500 fell for the fourth straight day. The Dow was down 4% in September.
At the heart of investor worries is competitive Chinese real estate developer Evergrande, who faces a possible default if it cannot make millions of dollars in debt payments on US dollar-denominated bonds this week. Evergrande shares in Hong Kong have fallen nearly 90% since July 2020 as China cracks down on property speculation. Investors fear a decline in global economic growth if China slows its real estate market too hard or lets Evergrande fail.
Adding to the mood over night was Evergrande's news that its real estate group would be punctually paying interest on a mainland-traded yuan bond.
Commodity-related stocks led the comeback in pre-trading on Wednesday as fears about the Evergrande impact subsided. Dow, Freeport-McMoRan, Occidental Petroleum, and Exxon were all early winners. China-exposed Wynn Resorts rebounded more than 1%.
"We're still in a position where stocks will ultimately rebound strongly because if Evergrande isn't really having a seismic impact on the US economy, US fundamentals are in good shape," said Fundstrat's Tom Lee on CNBCs "Easy Money" Tuesday night.
The Federal Reserve will end its two-day meeting on Wednesday and release a policy statement with economic and interest rate forecasts at 2 p.m. CET. Chairman Jerome Powell will hold a press conference afterwards.
The central bank's tough job is to calm markets during a turbulent month while preparing investors for the removal of some monetary stimulus. Powell previously announced that the emergency room of the Fed's $ 120 billion bond purchases could begin as early as this year.
"I think they'll set out that they had a discussion about tapering. I don't think they'll give any details," Rick Rieder, BlackRock's chief investment officer for global bonds, told CNBC. "I think they'll provide a framework in which to start in November or December."
FedEx stock slumped 5% in pre-trading hours after mail-order earnings fell last quarter due to rising labor costs. FedEx also lowered its forecast for the full year.