U.S. stock futures were little changed on Wall Street Sunday night, as investors awaited the Federal Reserve's highly anticipated policy meeting, during which it is expected to cut interest rates for the first time since 2020.
S&P 500 futures were flat in early trading, while Dow Jones Industrial Average futures were down 4 points, or less than 0.1%. Nasdaq 100 futures were down about 0.1%.
The S&P 500 is less than 1% away from its record high set in July and could set an all-time high this week. After a rough start to a historically weak September, the three major U.S. indexes ended last week’s trading sessions in the green, with the S&P 500 and Nasdaq Composite closing out their best week of 2024.
The US Federal Reserve is scheduled to meet on Tuesday and Wednesday, September 17 and 18, and is widely expected to make its first rate cut since it began raising rates in March 2022. The cut this week will be a pivotal move, as many investors hope the decision will lower corporate borrowing costs and improve overall earnings growth, boosting economic growth.
The Fed’s benchmark interest rate is currently between 5.25% and 5.5%. About 56% of traders see a 25 basis point cut, while 44% expect a larger 50 basis point cut, according to the CME FedWatch tool.
Stocks typically post strong gains during easing cycles, when initial rate cuts are able to support economic expansion, said Brian Belsky, chief investment strategist at BMO Capital.
“As long as nothing breaks in the economy, U.S. stocks remain firmly in a bull market, but with the remarkably strong one-year performance prior to the initial rate cut, future gains are likely to be relatively muted compared to historical norms (over the same period), in our view,” he said in a note on Friday.
Investors will also be watching August retail sales data due on Tuesday, September 17, and earnings from food companies General Mills and Olive Garden, the parent of Darden Restaurants, as well as FedEx and homebuilder Lennar.
The Dow Jones Industrial Average rose 297.01 points, or 0.72%, at the close of trading on Friday to 41,393.78. The S&P 500 index closed up 30.26 points, or 0.54%, at 5,626.02. The Nasdaq Composite index rose 114.30 points, or 0.65%, to 17,683.98.
During the week's trading ending at the end of Friday's session, the Dow Jones Industrial Average rose by 2.6%, the S&P 500 gained 4.02% weekly, and the Nasdaq Composite gained 5.95% during the week, with the latter two indices recording their strongest week in 2024 before the US Federal Reserve meeting.
