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US stocks rose modestly on Wednesday morning ahead of the Federal Reserve's decision on whether to hike interest rates for the first time in three years.

Futures on the Dow Jones Industrial Average (YM=F) edged up 0.1%; the S&P 500 (ES=F) rose 0.2%, and the Nasdaq-100 (NQ=F) gained 0.4% in premarket trading.

Stocks searched for gains after ending Tuesday's session lower. A bond sell-off that has pushed the 10-year yield (^TNX) to its highest level since the financial crisis weighed on stock sentiment.

Crypto prices tumbled, meanwhile, after the Senate failed to pass a key procedural vote for a regulatory framework for digital assets, known as the Clarity Act. Bitcoin's price (BTC-USD) dropped 2% to the $75,000 level.

At the same time, rising oil prices have contributed to worries that inflation will remain stubbornly high. Despite a pause in crude oil's rally, benchmark Brent (BZ=F) and WTI (CL=F) futures remain above $100 per barrel.

That sets the stage for Wednesday's crucial events: the Federal Reserve rate decision, the release of the Fed's dot plot, and Fed Chairman Kevin Warsh's press conference. Traders overwhelmingly expect the Fed to hike rates on Wednesday, with odds at 92%, according to CME Group.

Should Warsh and FOMC policymakers follow through with a hike, it could set the Fed up to clash with the White House, as President Trump has ratcheted up calls for lower interest rates.

Follow live coverage of the Fed meeting

In other economic data releases, August retail sales are expected to have reaccelerated, while a NAHB housing market indicator is expected to cool amid rising mortgage rates.

Yahoo Finance's Brian Sozzi reports:

Brace for minor market tremors if the Fed hikes interest rates, as many on Wall Street think will happen later today.

But if history holds up, any losses could prove short-lived.

The S&P 500 has declined by an average of 4.0% over the six weeks following the first Fed rate hike of a cycle across seven such episodes since 1988, per new analysis from strategists at The Kobeissi Letter.

Stocks recovered all of those losses over the next five to six weeks on average. In the six months following the first interest rate hike, the S&P 500 returned 4.0% on average. After 12 months, the S&P 500's average gain tallied +9.0%. Positive returns have occurred in every episode except 2022 over the twelve months.

"Fed rate hikes have historically been great buying opportunities," the strategists added.

Read more.

Bitcoin (BTC-USD) continued to slide on Wednesday, falling below $76,000, as hopes that the Clarity Act will pass this year faded.

The same went for other cryptocurrencies and crypto-related stocks, such as Robinhood (HOOD) and Coinbase (COIN), though the losses were not as severe as Tuesday's rout.

On Tuesday, the Senate voted 49–50 to block the Clarity Act from proceeding beyond debate, stalling progress on a regulatory framework for crypto.

Yahoo Finance's Hal Bundrick reports on what the vote means for crypto regulation:

In an interview with Yahoo Finance, Faryar Shirzad, chief policy officer at Coinbase, said that if the bill becomes law, it would pave the way forward for digital assets.

"If the bill passes, what you have is the U.S. finally doing what every other G20 country has done, which is to establish legislatively a regulatory framework about how crypto markets operate," he said. "That's a huge deal because the future of finance is being built on the blockchain. This law gives developers, innovators, traditional financial companies — all of us — the regulatory certainty we need to know how to build the next generation of finance and what rules apply."

Shipkevich said cryptocurrency holders are unlikely to see any immediate effects if the Clarity Act becomes law.

"On the institutional side, I can see a short-term, immediate catalyst for new institutional crypto projects," he said. "I imagine that we will see the institutional space pour more money into the crypto sphere since regulatory clarity is always good for investment."

Read more.

Economic data: FOMC rate decision; MBA mortgage applications, week ended Sept. 11 (-2.7% previously); New York Fed services business activity, September (0.5 previously); Retail sales advance, month-on-month, August (+0.9% expected, -0.6% previously); Retail sales ex auto and gas, month-on-month, August (+0.4% expected, -0.2% previously); Import price index, year-on-year, August (+5.9% previously); Export price index, year-on-year, August (+8.2% previously); Business inventories, July (+0.2% expected, +0% previously); NAHB housing market index, September (34 expected, 35 previously)

Earnings calendar: Lennar Corporation (LEN)

Catch up on some top stories from overnight:

Bitcoin tumbles 4% to $75,000 as hopes of CLARITY Act passage this year fade

We don't need AI regulation — leave safety to us, Nvidia's Jensen Huang says

Median US income rises to highest on record even as Americans feel affordability pinch

BOJ set to raise interest rates to 31-year high as inflation risks loom

The AI gold rush has a dress code: steel-toe boots

Reuters reports:

Stocks made tentative gains at the start of the Asian trading session on Wednesday as a rise in ‌global bond yields and oil prices paused ahead of the Federal Reserve's policy ‌decision due later in the day.

MSCI's broadest index of Asia-Pacific shares outside Japan fluctuated between gains and losses ​after declining for four consecutive sessions and was last up 0.2%, led by a 0.8% gain in Korean shares. S&P 500 e-mini futures nudged 0.1% higher.

Overnight on Wall Street, the S&P 500 slumped 0.5%, marking its second consecutive day of declines as the yield on the ‌10-year Treasury bond hit its ⁠highest level since 2007.

"U.S. equity markets closed lower overnight as rising Treasury yields, another jump in crude and the polarised debate around pacing ⁠AI development left the market in a cautious mood," said Tony Sycamore, market analyst at IG in Sydney.

Read more.