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* Fed expected to raise rates, signal fewer hikes ahead
* FedEx drops after slashing 2019 forecast, weighs on UPS
* Micron falls on tepid forecast
* Futures up: Dow 0.59 pct, S&P 0.60 pct, Nasdaq 0.51 pct (Changes comment, updates prices)
By Amy Caren Daniel
Dec 19 (Reuters) - Wall Street was set to open higher on Wednesday, with investors hoping the Federal Reserve will give them an early Christmas present by signaling fewer rate hikes given the turmoil in financial markets and rising fears of a recession.
The Fed is expected to raise rates for the fourth time this year when its two-day policy meeting ends at 2 p.m. ET (1900 GMT), but the focus will be on whether it still hints at three increases next year as it did in September.
Fed funds futures are pricing in only one more rate rise next year. The latest Reuters poll showed economists expect two rate hikes, with the probability of a U.S. recession in the next two years jumping to 40 percent.
A turbulent couple of months have pushed all three major U.S. indexes more than 10 percent below recent highs, into what is known as correction territory, and that has sparked calls, including from President Donald Trump, for the Fed to hold fire.
"The Fed announcement is going to be a major catalyst. I expect trading to be quiet heading into the announcement," said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.
"We're due for a pick up in markets. If you get the Fed out of the way, at least in the near term, you don't have any major hurdles for markets."
At 8:33 a.m. ET, Dow e-minis were up 139 points, or 0.59 percent. S&P 500 e-minis were up 15.25 points, or 0.6 percent and Nasdaq 100 e-minis were up 33.25 points, or 0.51 percent.
Adding to worries of an economic slowdown, FedEx Corp , seen as a bellwether for the global economy, slashed its 2019 forecast citing a weakening economy in Europe and slowdown in China. The stock tumbled 7.9 percent in premarket trading and dragged rival United Parcel Service Inc down 4.1 percent.
Micron Technology Inc fell 8.4 percent after the chipmaker gave a tepid forecast exacerbating fears that a two-year chip boom was fizzling out and that weighed on other chipmakers.
Pfizer Inc rose 1.4 percent after a deal to combine its consumer health business with GlaxoSmithKline Plc.
General Electric Co gained 4.8 percent after Bloomberg reported that the company has moved ahead with the planned IPO of its healthcare unit.
At 10 a.m. ET, data is likely to show existing home sales for November fell to 5.20 million units from 5.22 million units a month ago. (Reporting by Amy Caren Daniel in Bengaluru; Editing by Shounak Dasgupta)