Stock Market Today: Stocks slide, Treasury yields steady as Fed decision looms

U.S. equity futures moved lower Wednesday, while the dollar added to recent gains against its global peers and Treasury bond yields steadied, as investors braced for a key rate decision from the Federal Reserve later in the session.

Bond markets are also on high alert ahead of the Treasury's quarterly refunding statement, which is due at 8:30 am Eastern time, outlining the size and dates of 3-year, 10-year and 30-year bond auctions into the start of next year.

Investors will way of any extra supply to a market that is already feeling the affects of record budget deficits, which helped push 10-year note yields to a 2007 high of 5.027% last week, although the government's smaller-than-expected borrowing target of $776 billion has likely eased some of those concerns. 

The Fed rate decision at 2:00 pm Eastern time, with Chairman Jerome Powell's question-and-answer session with the media thirty minutes later, will undoubtedly be the day's focus, however, as investors look for more clarity on the central bank's rate path heading in to 2024 as the economy continues to outperform and the labor market adds to near-term inflation pressures.

Traders have effectively locked-in bets that the Fed will hold its key policy rate steady at between 5.25% and 5.5%, with the odds  of a January hike now pegged at around 34%. 

Benchmark 10-year note yields were last seen trading at 4.903% after rising modestly in the overnight session, with 2-year notes holding at 5.073%.

The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.1% higher overnight at 106.759 as the yen weakened further, to a one-year low of 151.21 against the dollar, following yesterday's Bank of Japan rate decision.

Market volatility gauges inched lower into today's Fed announcement, with the CBOE Group's VIX index falling $1.44 in overnight trading to $18.30, suggesting traders are betting on daily swings for the S&P 500 of around 1.14%, or 48 points, over the next month. 

The S&P 500, which added 27 points yesterday but still closed out the month with a loss, extending that losing streak to the longest since March of 2020, is set to open another 15 points to the downside at the start of trading today.

Futures contacts tied to the Dow Jones Industrial Average, meanwhile, are priced for a 119 point pullback while those linked to the tech-focused Nasdaq are looking at a 48 point decline.

In Europe, the region-wide Stoxx 600 was marked 0.33% higher in early Frankfurt trading, while Britain's added 0.11% in London.

Overnight in Asia, solid profits from Toyota, as well as an improved full-year outlook, helped the Nikkei 225 surge 2.41% over the session, with the region-wide MSCI ex-Japan index nudging 0.07% higher into the close of trading.

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