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Fed's rate decision expected at 2:00 p.m. ET

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Merck ( MRK ) rises after signing up to $2 bln obesity drug deal

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Futures up: Dow 0.27%, S&P 500 0.24%, Nasdaq 0.22%

(Updates with prices)

By Lisa Pauline Mattackal and Purvi Agarwal

Dec 18 (Reuters) - U.S. stock index futures edged up on

Wednesday, as markets eagerly awaited the Federal Reserve's

final rate decision of the year and signals on whether

policymakers will take a more cautious stance in 2025.

The Fed is widely expected to reduce interest rates by 25

basis points at its meeting. The announcement is expected at 2

p.m. ET on Wednesday.

With a rate cut broadly priced in, the Fed's summary of

economic projections (SEP), which includes the "dot plot" of

rate projections, and comments from Chair Jerome Powell will be

in focus for indications on the rate path in 2025.

"The prospect of fiscal stimulus among other promised

policies by U.S. President-elect Donald Trump will, in our view,

force some scaling back in expected rate cuts included in dot

plot projections," ING analysts said, adding they still expected

a 25 basis point cut at the meeting.

"We doubt the Fed will derail from a generally cautious

stance on guidance."

Wall Street's main indexes had dipped in Tuesday's session,

with the Dow notching its ninth straight daily decline, its

longest losing streak since February 1978, as markets

increasingly look for a more hawkish Fed next year on the back

of strong growth and persistent inflation limiting the case for

steady rate cuts.

U.S. Treasury yields have ticked higher with the change in

Fed expectations, with the 10-year yield up past

4.4%.

Most rate-sensitive megacap stocks ticked higher in

premarket trading, with AI giant Nvidia ( NVDA ) up 2.3% after

hitting an over two-month low on Tuesday.

Tesla, meanwhile, dropped 1.9% after rising over

14% in the last three sessions.

At 7:00 a.m. ET, Dow E-minis were up 118 points, or

0.27%, S&P 500 E-minis were up 14.75 points, or 0.24%

and Nasdaq 100 E-minis were up 48.25 points, or 0.22%.

Still, despite some jitters over future Fed policy, stocks

are on track to end the year strong with the S&P 500 up nearly

27%, the Nasdaq up nearly 34% and the Dow up over 15%.

The rally was fueled by technology companies that

capitalized on the euphoria around artificial intelligence, the

prospects of a lower rate environment and hope of pro-business

policies from the incoming Donald Trump administration.

Crypto-focused stocks slipped as bitcoin fell 2%.

MARA Holdings ( MARA ) was down 1.2% and Riot Platforms ( RIOT )

fell 1.4%.

Birkenstock ( BIRK ) edged higher after beating market

expectations for fourth-quarter results, helped by robust

full-price sales of the footwear maker's pricey sandals in the

U.S. and Asia.

Merck ( MRK ) gained 1.6% after the drugmaker signed a deal

worth up to $2 billion with Hansoh Pharmaceuticals to

develop and commercialize the Chinese biotech's experimental

obesity drug.

General Mills ( GIS ) was up 2% after the Cheerios maker

beat quarterly sales estimates, aided by its efforts to reduce

prices of some products to improve demand.