US stock index futures muted with Fed, rate cut on tap

U.S. stock index futures moved little in evening deals on Tuesday as investors hunkered down before the conclusion of a Federal Reserve meeting that is likely to result in an interest rate cut. 

Futures were mildly positive following a similar trend on Wall Street, although U.S. stock indexes relinquished early gains and ended below record highs hit during the session. 

S&P 500 Futures rose 0.1% to 5,704.50 points, while Nasdaq 100 Futures rose 0.1% to 19,698.0 points by 19:38 ET (23:38 GMT). Dow Jones Futures rose 0.1% to 42,071.0 points.  Markets see greater chance of 50 bps cut 

The Fed is widely expected to enact its first interest rate cut in more than four years at the conclusion of a two-day meeting on Wednesday. 

Markets were largely split over a 25 or 50 basis point reduction, although recent indicators showed traders pricing in a greater chance for a bigger cut.

CME Fedwatch showed traders pricing in a 64% chance for a 50 bps cut and a 36% chance for a 25 bps cut. 

The breadth of Wednesday’s cut is likely to set expectations for how the Fed plans to carry out an easing cycle over the coming months. Markets see the Fed cutting rates by at least 100 bps by end-2024. 

But recent economic data somewhat complicated the Fed’s plans to cut rates. Inflation read stronger-than-expected for August, as did retail sales data- suggesting that the U.S. economy remained resilient, and lessening the need for immediate support.

But the labor market was also seen cooling rapidly, which could still elicit a deep rate cut and dovish outlook from the Fed. Wall St keeps record highs in sight 

Wall Street indexes relinquished early gains to end flat on Tuesday, although they did briefly hit record highs. 

The S&P 500 closed flat at 5,634.58 points, while the NASDAQ Composite rose 0.2% to 17,626.95 points. The Dow Jones Industrial Average ended marginally lower at 41,606.18 points. 

The S&P 500 and the Dow both briefly hit record highs. The Nasdaq remained well below recent peaks following an extended selldown in technology stocks over the past month. US Steel rises on report of Nippon Steel deal extension

Among major aftermarket movers, United States Steel Corporation (NYSE:X ) rose over 3% after Bloomberg reported that Nippon Steel had won an extension in the review of its $14.1 billion approach for the U.S. steelmaker. 

A decision is now likely to be made only after the 2024 elections in November. 

Microsoft Corporation (NASDAQ:MSFT ) and BlackRock Inc (NYSE:BLK ) rose slightly after they announced a $30 billion fund for investment in artificial intelligence infrastructure.

Source: Investing.com