U.S. stock index futures edged slightly higher on Wednesday as investors awaited a pivotal Federal Reserve decision, which is expected to result in the first interest rate cut since March 2020.
By 06:22 ET (10:22 GMT), S&P 500 futures rose by 8 points or 0.1%, Nasdaq 100 futures gained 33 points or 0.2%, and Dow Jones futures increased by 65 points or 0.2%.
Greater Odds for a 50 bps Cut
The Federal Reserve is expected to lower borrowing costs from their current two-decade high of 5.25% to 5.5% following its two-day meeting. According to the CME Group’s FedWatch Tool, traders see a 65% chance for a 50-basis point cut and a 35% chance for a 25-basis point reduction.
However, analysts at ING suggested the decision is still a “close call.” U.S. retail sales in August showed unexpected growth, signaling consumer resilience and broader economic strength, which—along with mixed inflation data and cooling labor demand—could complicate the Fed’s decision.
The scope of Wednesday’s rate reduction will likely shape expectations for how the Fed will manage a potential easing cycle in the coming months. Markets currently expect the Fed to lower rates by at least 100 basis points by the end of 2024.
Wall Street Nears Record Highs
Both the S&P 500 and the Dow Jones Industrial Average remained mostly flat after a volatile trading session on Tuesday, with the latter briefly touching record highs, supported by strong retail sales data. The tech-heavy Nasdaq Composite closed up 36 points, or 0.2%, for the day.
“Stocks shot up at the start but pulled back later in the day due to uncertainties around the Fed,” analysts at Vital Knowledge said in a client note.
U.S. Steel Jumps on Nippon Steel Deal Extension
In premarket trading, U.S. Steel shares rose after a Bloomberg report indicated that Nippon Steel had secured an extension for its $14.1 billion bid to acquire the American steelmaker. A decision on the deal is now expected after the November 2024 elections.
Elsewhere, shares of 23andMe fell sharply after all seven independent directors on its board resigned, citing dissatisfaction with a take-private offer from CEO Anne Wojcicki.
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