Wall St set for higher open as traders raise bets on bigger Fed rate cut

By Shashwat Chauhan and Purvi Agarwal

(Reuters) -U.S. stock index futures were marginally higher on Friday as investors reevaluated the possibility of a bigger interest rate cut by the Federal Reserve next week, while Boeing (NYSE:BA ) fell after the planemaker's factory workers went on strike.

Traders' bets of a 50-basis point rate cut jumped overnight, now standing at 47% compared with 14% on Thursday, CME's FedWatch Tool showed.

Former New York Fed President Bill Dudley said there was a strong case for a 50-bps interest rate cut. Separate media reports calling the decision "a close call" also added to the uncertainty.

"A couple of articles were published in the Wall Street Journal and the Financial Times suggesting that a 50-bps move was still in play, which has led markets to once again reevaluate their expectations," Deutsche Bank analysts said.

"If pricing stays where it is currently, it would be the first meeting in years where there's serious uncertainty about the rates decision."

The dollar came under pressure against major global peers, while yields on U.S. government bonds eased across the curve. [MKTS/GLOB]

Bets of the Fed sticking to a smaller 25-bps cut when it meets on Sept. 17-18 had firmed on Thursday following a slightly higher producer prices report, which came on the heels of the August consumer prices data.

Wall Street's main indexes had closed higher in the previous session, boosted by rising megacap stocks, keeping all three U.S. benchmarks on track for weekly gains.

Investors will parse the University of Michigan's consumer sentiment survey for September, which is expected around 10 a.m. ET (1400 GMT).

Dow E-minis were up 74 points, or 0.18%, S&P 500 E-minis were up 12 points, or 0.21%, and Nasdaq 100 E-minis were up 15.25 points, or 0.08%.

Futures tracking the economically sensitive Russell 2000 small cap index rose 0.8%.

Boeing fell 2.9% in premarket trading as its U.S. West Coast factory workers walked off the job early on Friday after overwhelmingly rejecting a contract deal.

Adobe (NASDAQ:ADBE ) slid 8.1% after the Photoshop maker forecast fourth-quarter earnings below analysts' estimates, signaling stiff competition and soft demand for its AI-integrated editing tools.



Moderna (NASDAQ:MRNA ) fell 4.1%. At least two brokerages downgraded their rating on the vaccine maker's shares a day after it pushed back its break-even goal by two years and predicted 2025 sales below its forecast for the current year.

U.S. equities saw their biggest outflow since April in the week till Wednesday, according to a report by Bank of America.

Source: Investing.com