Futures kick off Fed meeting week on cautious note
For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window.
Futures: Dow up 0.23%, S&P 500 up 0.12%, Nasdaq off 0.02%
Sept 16 (Reuters) -U.S. stock index futures were flat to slightly higher on Monday as caution prevailed ahead of a pivotal monetary policy decision by the Federal Reserve later in the week, with investors pricing in a steep reduction in borrowing costs.
Ever since Fed Chair Jerome Powell hinted at an upcoming rate cut late last year, markets have embarked on a bull run, with the S&P 500 .SPX and the Dow .DJI now near record highs.
However, following a mixed batch of economic data and comments from a former policymaker in the last few weeks, traders swayed in their bets on what decision the central bank will arrive at during its Sept. 17 to 18 meeting.
Odds for a 50-basis-point cut are at 59% from 30% a week ago, according to the CME FedWatch Tool, which showed a 41% probability for a 25-basis-point reduction. There is concern that an outsized move could mean the Fed sees the economy cooling at a faster pace.
"As important as the 25 vs 50 debate will be the communication from the Fed. Would a 50bps be the start of 50s or a one off larger move to start the cycle? Would a 25bps mean the bar for subsequent 50s is high? There will be lots to digest," a group of strategists at Deutsche Bank led by Jim Reid said in a note.
The benchmark index and the tech-heavy Nasdaq .IXIC notched their biggest weekly jump in about 11 months on Friday, although analysts attributed the optimism to signs of a robust economy rather than rate-cut expectations.
At 05:32 a.m., Dow E-minis 1YMcv1 were up 95 points, or 0.23%, S&P 500 E-minis EScv1 were up 6.5 points, or 0.12% and Nasdaq 100 E-minis NQcv1 were down 4.5 points, or 0.02%
Futures tracking small caps RTYc1, which tend to do well with lower borrowing costs, outperformed with a 0.90% rise.
Economic data due through the week is light, with retail sales, weekly jobless claims, housing starts and industrial production on tap.
Rate-sensitive growth stocks such as Nvidia NVDA.O slipped 0.40%, while Meta META.O inched up 0.30% and Tesla TSLA.O rose 0.60% in premarket trading.
Intel Corp INTC.O climbed 3.7% after a report showed the chipmaker had officially qualified for as much as $3.5 billion in federal grants to make semiconductors for the U.S. Department of Defense.
Trump Media & Technology DJT.O added 4.5% after an apparent second assassination attempt on the Republican candidate and former president on Sunday, weeks before the closely watched U.S. presidential election.
Crypto stocks trended lower, with Microstrategy MSTR.O down 2% and Riot Platforms RIOT.O slipping 1.4%, tracking a 1.7% fall in bitcoin prices BTC=.
US rates have risen but unemployment has stayed low https://reut.rs/3zh65D1
Reporting by Johann M Cherian in Bengaluru; Editing by Pooja Desai
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
