United States stock futures traded in a tight range on Sunday night (Monday AEDT), extending last week’s gains as investors anticipate potential interest rate cuts at this week’s Federal Reserve meeting.
By 10:35 am AEDT (11:35 pm GMT), Dow futures were flat, while S&P 500 and Nasdaq 100 futures rose 0.1% each.
Sunday’s session follows a second consecutive positive week for the major benchmarks. The Dow added 0.5%, the S&P 500 lifted 0.3% and the Nasdaq Composite gained 0.9% for the week, supported by softer-than-expected inflation data from September’s core personal consumption expenditures (PCE) price index, which was released late due to the government shutdown.
That report was the final major economic release ahead of the Fed’s policy meeting this week.
Traders have increasingly priced in a rate cut at the year-end Federal Open Market Committee (FOMC) meeting.
Fed funds futures now indicate roughly an 86.2% probability of a 25 basis point (bp) reduction, up from below 67% a month ago, according to the CME Group FedWatch Tool.
Richard Yetsenga, Group Chief Economist for ANZ, commented in a note to clients: "We expect a 25bp cut in the target range for the federal funds rate to 3.50–3.75% at the 9–10 December Federal Open Market Committee (FOMC) meeting.
"Whilst retaining an easing bias, we expect Chair Powell will signal a cautious meeting-by-meeting approach to future rate cuts, to balance concerns about softness in hiring against elevated inflation and inflation uncertainty.
"We expect the FOMC will cut by an additional 50bp next year, 25bp in March and 25bp again in June, taking the fed funds target range to 3.0–3.25%."
No significant economic data is scheduled for Monday, though the New York Fed will release its survey of consumer expectations.
Investors will keep an eye out for quarterly earnings from companies including Lululemon, Costco, Broadcom, Oracle, and Adobe later this week.
