A trader monitors screens as Federal Reserve Chair Jerome Powell holds a news conference post-Fed rate announcement on June 12, 2024, at the New York Stock Exchange. (Brendan McDermid | Reuters)
Stock futures remained flat overnight on Tuesday as Wall Street braced for a potential rate cut from the Federal Reserve after a protracted period of aggressive hikes aimed at curbing inflation. Dow Jones Industrial Average futures added 15 points, while S&P 500 futures hovered near unchanged, and Nasdaq-100 futures inched up 0.05%.
Tuesday’s mixed trading session saw the S&P 500 gain 0.03%, setting another intraday record high. The Dow dipped nearly 16 points, while the Nasdaq Composite increased by 0.2%.
Investors are on edge ahead of an anticipated rate cut from the Fed, expected after its two-day policy meeting concludes Wednesday. This meeting is considered pivotal, marking a potential shift from aggressive monetary tightening, which began in March 2022, to a more accommodative stance.
Rate cuts generally boost corporate earnings and could provide relief from high borrowing costs and persistent inflation. The market, already on a record-setting streak with the S&P 500 up 18% this year, could see further gains post-rate cut. Historical data from Canaccord Genuity indicates that since 1974, the S&P 500 has averaged rallies of 6.4%, 9.8%, and 15.6% in the three, six, and 12 months following an initial cut.
However, traders are divided on the scale of the potential cut. The CME Group’s FedWatch tool indicates a 63% probability of a 50 basis point reduction and a 37% chance of a 25 basis point cut.
Some investors, like Peter Cecchini of Axonic Capital, caution against a large cut. He described a 50 basis point cut as “unusual” given the current housing market conditions and suggested that such a move might be premature.
As the Fed prepares for what could be its first rate cut in years, Wall Street remains vigilant, weighing the benefits of lower rates against the risks of a hasty policy shift.
Original Story https://www.cnbc.com/2024/09/17/stock-market-today-live-updates.html
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