US stock index futures inch higher with Fed, rate cut on tap

Investing.com– U.S. stock index futures pointed slightly higher on Wednesday as investors hunkered down before a landmark Federal Reserve decision that is likely to result in the first interest rate cut since March 2020.

S&P 500 futures had risen by 8 points or 0.1%, while Nasdaq 100 futures had gained 33 points or 0.2% and Dow Jones futures had added 65 points or 0.2% by 06:22 ET (10:22 GMT).

Markets see greater chance of 50 bps cut

The Fed is widely expected to bring borrowing costs down from a more than two-decade high of 5.25% to 5.5% following its latest two-day gathering.

The CME Group’s closely-monitored FedWatch Tool showed traders pricing in a 65% chance for a 50-basis point cut and a 35% chance for a 25-basis point reduction.

However, as analysts at ING said the decision is still a “close call.” In the final data point before the announcement, US retail sales unexpectedly rose in August, pointing to consumer resilience and broader economic strength.

Such trends, along with mixed recent inflation figures and cooling labor demand, could further complicate matters for Fed officials.The breadth of Wednesday’s drawdown is likely to set expectations for how the Fed plans to carry out a possible easing cycle over the coming months.

Markets see the Fed lowering rates by at least 100 bps by end-2024.Wall St keeps record highs in sight. The benchmark S&P 500 and 30-stock Dow Jones Industrial Average were both mostly unchanged following a choppy trading session on Tuesday. The averages, bolstered by the surprise retail sales numbers, had touched record highs earlier in the session. Meanwhile, the tech-heavy Nasdaq Composite ended the trading day higher by 36 points or 0.2%.

“[S]tocks sprinted out of the gate before fading hard in the afternoon due to questions/concerns about the Fed,” analysts at Vital Knowledge said in a note to clients.

U.S. Steel rises on report of Nippon Steel deal extension

Among major movers in premarket trading, shares in United States Steel (NYSE:X) Corporation climbed after Bloomberg News reported that Nippon Steel had won an extension in the review of its $14.1 billion approach for the American steelmaker.A decision is now likely to be made only after the 2024 elections in November.

Elsewhere, all seven of the independent directors on the board of 23Andme Holding Co (NASDAQ:ME) resigned on Tuesday, sending shares down sharply prior to the opening bell. The directors said they had not received a satisfactory take-private offer from the company’s Chief Executive Anne Wojcicki.

(Ambar Warrick contributed reporting)