Market Analysis

U.S. stock index futures showed minimal movement during Tuesday's evening trading, as investors awaited the conclusion of the Federal Reserve's meeting, which is expected to result in an interest rate cut.

Futures followed the same slightly positive trajectory seen on Wall Street, though major U.S. indexes gave up early gains and ended below record highs reached earlier in the session.

S&P 500 futures inched up by 0.1% to 5,704.50 points, Nasdaq 100 futures gained 0.1% to 19,698.0 points, and Dow Jones futures rose 0.1% to 42,071.0 points as of 19:38 ET (23:38 GMT).

Markets Expect a 50 Basis Points Cut
The Federal Reserve is anticipated to announce its first interest rate cut in over four years at the end of its two-day meeting on Wednesday. Traders are split between a 25 or 50 basis point reduction, though recent market data indicates an increased likelihood of a larger 50 bps cut.

According to CME FedWatch, traders currently see a 64% chance of a 50 bps cut, while 36% expect a 25 bps cut.

The scale of Wednesday’s cut will likely influence market expectations for how the Fed plans to manage its monetary policy in the coming months. Markets are pricing in a total of 100 bps in rate cuts by the end of 2024.

However, recent economic data, including stronger-than-expected inflation and robust retail sales for August, suggest that the U.S. economy remains relatively resilient, reducing the immediate need for aggressive rate cuts. Still, the labor market appears to be cooling, which could prompt a more substantial cut and a dovish stance from the Fed.

Wall Street Eyes Record Highs
On Tuesday, U.S. stock indexes briefly touched record highs before ending the session flat. The S&P 500 closed unchanged at 5,634.58 points, while the Nasdaq Composite added 0.2% to close at 17,626.95 points. The Dow Jones Industrial Average finished slightly down at 41,606.18 points.

Both the S&P 500 and Dow Jones hit record levels earlier in the session. The Nasdaq, however, remained well below its recent peaks following a month-long selloff in technology stocks.

U.S. Steel Climbs on Nippon Steel Deal News
In aftermarket trading, United States Steel Corporation (NYSE) saw a rise of over 3% after Bloomberg reported that Nippon Steel had secured an extension for the review of its $14.1 billion bid for the American steelmaker. A final decision on the deal is now expected after the 2024 elections in November.

Additionally, Microsoft Corporation (NASDAQ) and BlackRock Inc. (NYSE) saw slight gains after announcing a $30 billion fund aimed at investing in artificial intelligence infrastructure.

Paraphrasing text from "Investing" all rights reserved by the original author.