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U.S. Futures Edge Higher; Fed Meeting Limits Activity

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By Peter Nurse

Investing.com -- U.S. stocks are seen opening marginally higher Monday, remaining near record levels, heading into a week that includes a keenly-awaited Federal Reserve meeting.

At 7 AM ET (1200 GMT), the Dow futures contract was up just 5 points, or less than 0.1%, S&P 500 futures traded 3 points, or 0.1%, higher, and Nasdaq 100 futures climbed 50 points, or 0.3%.

The three major indices closed just higher Friday, with the broad-based S&P 500 ending up 0.2%, at a new record high. The blue-chip Dow gained under 0.1% while the tech-heavy Nasdaq Composite closed 0.4% higher, helped by a rotation back into growth names.

The Fed’s two-day policy meeting, ending Wednesday, will likely limit activity in the early part of the week. The central bank is not expected to take any immediate action, but investors will be focusing on the statement to see whether the policy makers open discussions about how and when to taper the $120 billion in monthly central bank bond purchases.

While inflation is currently running red hot, U.S. employers have added fewer than half of the 2 million jobs that Fed chief Jerome Powell had suggested he was hoping for after the Fed's April policy meeting.

“While the Fed may be a little nearer to discussing tapering, we are not looking for the statement, new projections or Chair Powell’s press conference to unsettle markets,” said analysts at ING, in a note. “After all markets seem quite comfortable with the view that Fed tapering could start in December this year, with the first rate hike in early 2023.”

In corporate news, Novavax (NASDAQ:NVAX) stock rose premarket Monday after the drugmaker reported that late-stage data from its U.S.-based clinical trial showed its vaccine is more than 90% effective against Covid-19 across a variety of variants of the virus.

Tesla (NASDAQ:TSLA) will also be in the spotlight after CEO Elon Musk tweeted over the weekend that the electric car manufacturer will resume Bitcoin transactions once it confirms there is reasonable clean energy usage by miners.

Crude oil prices pushed higher Monday, trading near multi-year highs, helped by an improved outlook for demand as increased Covid-19 vaccinations push global travel back to near normalcy.

By 7 AM ET, U.S. crude was up 0.6% at $71.35 a barrel, climbing to its highest level since October 2018, and on course for a fifth quarterly advance, which would be the best run since 2010. Brent was up 0.7% at $73.22, around its highest since May 2019.

U.S. daily air travelers have topped 2 million for the first time since the pandemic began with traffic returning to pre-pandemic levels in North America and much of Europe as lockdowns and other restrictions are being eased, although the U.K. could throw a spanner in the works later Monday.

Elsewhere, gold futures fell 1.2% to $1,856.75/oz, while EUR/USD traded 0.1% higher at 1.2121.

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