The major U.S. index futures are indicating a nearly unchanged start on Tuesday, suggesting that stocks may exhibit minimal movement following a predominantly positive close in the prior session. Market participants might exhibit caution in executing substantial trades as the Federal Reserve initiates its two-day monetary policy meeting. While the Fed is anticipated to reduce interest rates by 25 basis points, market participants will focus on the accompanying statement and the latest economic projections from officials for insights into the future trajectory of rates.
Reports shows a 96.0 percent probability of the Fed implementing a quarter-point rate cut, alongside a minimal 4.0 percent likelihood of a half-point reduction. The Federal Reserve is anticipated to reduce rates by an additional 25 basis points during its meetings in October and December. However, Fed Chair Jerome Powell is expected to indicate that any future rate cuts will be contingent upon the economic data that emerges. The futures exhibited minimal variation despite the Commerce Department’s report indicating that retail sales increased significantly more than anticipated in August. The Commerce Department reported that retail sales rose by 0.6 percent in August, aligning with an upwardly adjusted increase from July.
Retail sales were anticipated by economists to increase by 0.2 percent, in contrast to the 0.5 percent growth that was initially reported for the prior month. Equities experienced a predominantly upward trend during Monday’s trading session, building on the substantial gains achieved in the previous week. The Nasdaq and the S&P 500 have achieved new record closing highs amid the ongoing upward trend. The Nasdaq surged by 207.65 points, reflecting a 0.9 percent increase, closing at 22,348.75. Meanwhile, the S&P 500 advanced by 30.99 points, marking a 0.5 percent rise to finish at 6,615.28. The Dow, exhibiting a more restrained performance, increased by 49.23 points, reflecting a 0.1 percent rise to reach 45,883.45. The upward movement on Wall Street was influenced by favorable remarks from President Donald Trump regarding trade discussions between leading U.S. and Chinese representatives in Europe. Trump stated that the discussions have “gone VERY WELL!” He also mentioned that a “deal was also reached on a ‘certain’ company that young people in our Country very much wanted to save,” which likely pertains to the Chinese-owned social media platform TikTok. Trump indicated that he will engage in discussions with Chinese President Xi Jinping on Friday, characterizing the relationship as “a very strong one.”
Simultaneously, market participants remained focused on the upcoming monetary policy announcement from the Federal Reserve scheduled for Wednesday. Recent data indicates that inflation remains relatively subdued while the labor market shows signs of weakening. Consequently, it is widely anticipated that the Fed will lower interest rates by at least a quarter point. Computer hardware stocks delivered impressive results, which climbed 2.5 percent to achieve a record closing high. Notable strength was evident in networking stocks, as demonstrated by the 2.3 percent increase in the NYSE Arca Networking Index. Gold, steel, and software stocks exhibited significant strength, whereas airline, oil service, and housing stocks experienced notable declines.