Fed decision day, Nvidia closes with $1 trillion valuation - what's moving markets

Policymakers at the Federal Reserve are preparing for a closely watched interest rate decision, and it is widely believed that the central bank will keep borrowing costs unchanged. Elsewhere, a California federal court temporarily blocked a major merger between Microsoft and Activision Blizzard, while Nvidia's valuation approached more than $1 trillion for the first time.

1. The final countdown to the Fed's decision

The Federal Reserve will make a new monetary policy announcement at the end of its two-day meeting on Wednesday, and investors are keen to learn whether the central bank will push to suspend its long cycle of rate hikes or raise borrowing costs further.

Most estimates point to the former, especially after Tuesday's data showed that headline inflation in the world's largest economy fell more than expected in May. At an annualized rate of 4.0%, the consumer price index was at its lowest level since early 2021 and has now slowed for 11 straight months.

But the figure is still well above the Fed's mandated 2% target and the labor market is showing signs of strength, suggesting that while Fed officials may choose to stop raising rates, they may mark the move as only temporary.

2. Futures mixed as Fed announcement looms

U.S. stock futures were mixed on Wednesday as investors awaited the latest policy decision from the Federal Reserve.

At 04:51 EST (08:51 GMT), the Dow futures contract slipped 35 points or 0.10%, the S&P 500 futures rose 9 points or 0.19% and the Nasdaq 100 futures rose 41 points or 0.27%.

The major indices all posted solid gains on Tuesday after weaker-than-expected U.S. inflation data. The Dow Jones Industrial Average rose 0.43 percent, the S&P 500 jumped 0.69 percent and the tech-heavy Nasdaq Composite climbed 0.83 percent.

According to Investing.com's Fed Rate Monitor tool, there is a more than 91% chance the Fed will leave its benchmark interest rate unchanged in a range of 5.00% to 5.25%. At the same time, there is less than a 10% probability that the bank will choose to raise its borrowing costs by a quarter of a basis point.

3. Federal court temporarily blocks Microsoft-Activision merger

A California federal court has ruled in favor of a request by U.S. antitrust regulators to temporarily block the completion of a massive $69 billion merger between Microsoft (NASDAQ:MSFT) and Activision Blizzard (NASDAQ:ATVI).

The Federal Trade Commission had previously asked the court to issue a preliminary injunction against the eventual tie-up pending the agency's own administrative review of the deal's legality, which is set to begin later this year.

A U.S. District Court judge in California then put the merger on hold pending a two-day evidentiary hearing next week. At that hearing, the federal court will choose whether a preliminary injunction is necessary.

The Federal Trade Commission has already indicated that it believes the biggest deal ever in the video game industry will reduce competition. Microsoft