By Shreyashi Sanyal
(Reuters) - U.S. stock index futures edged higher on Wednesday, with those of the Nasdaq rising the most on gains in Tesla shares, while investors treaded cautiously ahead of comments from Federal Reserve Chair Jerome Powell later in day.
Powell's speech will be closely watched for signs of a slowdown in the pace of interest rate hikes by the central bank as well as to assess the general health of the U.S. economy.
"Fed Chair Powell is speaking, but past comments have done little other than chant 'hike, hike, hike'," said Paul Donovan, chief economist, UBS Global Wealth Management.
"Powell has yet to explain the mechanism by which hiking rates is supposed to reduce inflation (which matters to analyzing when rates might peak) ... today's speech should signal a slowing of rate hikes."
Hopes that the Fed will now hike rates in smaller increments and recent data pointing to a mild cooling in prices have positioned the benchmark S&P 500 index for its second straight month of gains.
The Dow Jones Industrial Average has gained nearly 18% in the last two months, while the Nasdaq index has added about 4%.
Traders see the Fed increasing rates by 50 basis points in December, with the rates peaking in June 2023. [FEDWATCH]
Electric-vehicle maker Tesla Inc shares rose 1.4% in premarket trading as its sales in November were boosted by price cuts and incentives offered on its Model 3 and Model Y, according to data from China Merchants Bank International (CMBI).
The company led gains among other growth stocks, including Apple Inc, Microsoft Corp and Amazon.com Inc, all of which rose between 0.5% and 0.6%.
Boeing Co shares gained 1.4% after U.S. Senate Commerce Committee Chair Maria Cantwell drafted a proposal granting exceptions for its two 737 MAX variants if they include safety enhancements.
At 6:47 a.m. ET, Dow e-minis were up 24 points, or 0.07%, S&P 500 e-minis were up 8 points, or 0.2%, and Nasdaq 100 e-minis were up 44.25 points, or 0.38%.
Biogen Inc rose 4.0% after its experimental Alzheimer's drug made along with Japanese co Eisai Co Ltd slowed cognitive decline in a closely watched trial.
On the data front, the U.S. Commerce Department will release its second estimate of third-quarter gross domestic product. The report is expected to show the economy grew at a 2.7% annualized rate, slightly above the department's previous projection of 2.6%.
An ADP National Employment report is set to show that private employment increased by 200,000 jobs in November, compared with 239,000 jobs added in the previous month.
(Reporting by Shreyashi Sanyal & Devik Jain; Additional reporting by Shubham Batra; Editing by Anil D'Silva)