By Steve Goldstein, MarketWatch
LONDON (MarketWatch) -- U.S. stock futures rose on Wednesday, with traders ignoring the traditional caution ahead of a Federal Reserve interest-rate meeting to take a riskier stance.
S&P 500 futures rose 7 points to 1,048.70 and Nasdaq 100 futures added 6.5 points to 1,682.00. Futures on the Dow Jones Industrial Average rose 64 points.
U.S. stocks ended fairly unchanged Tuesday, as the decision by Warren Buffett to splash out $44 billion on railroad operator Burlington Northern Santa Fe was offset by weakness in the chip sector on a Morgan Stanley downgrade and news that Johnson & Johnson was cutting 7% of its workforce. The Dow Jones Industrial Average fell 17 points, while the S&P 500 rose 2 points and the Nasdaq Composite added 8 points.
"From a historical perspective, M&A gains momentum often after economies exit a recession or emerge from a financial crisis," said John Stoltzfus, a strategist at Ticonderoga Securities.
Equity strategists at Credit Suisse reiterated their year-end 1,100 call for the S&P 500 as they told investors "don't sell equities," citing the economic outlook, earnings, credit indicators, valuation, positioning, excess liquidity and tactical indicators.
The main event for Wednesday will be the Federal Open Market Committee's interest rate decision, due 2:15 p.m. Eastern.
The question isn't whether the Fed will change interests from current near-zero levels, but whether it will provide any signals as to a withdrawal of some of the extraordinary measures it's enacted to help the economy limit the damage from the credit crunch.
One phrase from the Fed's last statement will draw particular scrutiny as to whether it's repeated: "economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period."
Currency analysts at Societe Generale expect the phrase to stay, though some in the market expect a slight change.
"Any such change would be a big event for risky assets, which have been well supported by generous liquidity conditions," said the analysts, who suggested buying the dollar on dips on the "hunch" that concerns over growth, global liquidity and the bank sector will send investors away from perceived riskier assets.
Before the Fed decision, there's economic data, including the widely followed but oft-volatile ADP employment gauge for October as well as the Institute for Supply Manufacturing's non-manufacturing index for October.
On the earnings front, the major report comes after the close when Cisco Systems (CSCO 22.91, -0.09, -0.39%) unveils results.
Among the firms reporting before the bell are Time Warner (TWX 30.16, +0.01, +0.03%) , R.R. Donnelley (RRD 20.75, +0.38, +1.87%) and Molson Coors (TAP 49.40, -0.32, -0.64%) .
Dow industrials component Kraft Foods (KFT 27.54, -0.10, -0.36%) may see weakness after reporting weaker-than-expected sales late Tuesday. Kraft also didn't say whether it will make a formal bid for Britain's Cadbury (CBY 51.21, +0.30, +0.59%) ahead of a deadline.
In Asia, the Nikkei 225 rose 0.4% while the Kospi Composite advanced 1.9% in Seoul.
Europe stocks also were strong, with the Stoxx 600 rising 1.4%.
The currency markets when into risk-taking mode, lifting the euro against major rivals and the dollar vs. the Japanese yen.
Gold futures hit a fresh record high, climbing as high as $1,094.60 an ounce.
Before weekly inventories data, oil futures recaptured the $80 a barrel mark.
Yields on 10-year Treasury bonds rose 1 basis point to 3.48%.
