US STOCKS-Wall St set for subdued open as investors pause after rate cut-fuelled rally
BY Reuters | ECONOMIC | 09/20/24 09:09 AM EDT(For a Reuters live blog on U.S., UK and European stock markets, click or type LIVE/ in a news window.)
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Poll: Fed to cut rates by 25 bps in Nov and Dec
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FedEx
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Nike
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Futures: Dow up 0.07%, S&P 500 down 0.13%, Nasdaq off 0.15%
(Updated at 8:34 a.m. ET/1234 GMT)
By Johann M Cherian and Purvi Agarwal
Sept 20 (Reuters) -
Wall Street's main indexes were set for a muted open on Friday as investors held back after a rally in the previous session that was sparked by an oversized interest rate cut by the Federal Reserve.
The S&P 500 notched its eighth session of gains out of nine on Thursday and closed at an all-time high, breaching its mid-July milestone. The blue-chip Dow also notched a record high and settled above the psychological level of 42,000 points.
All three major indexes are on track for weekly gains of over 1%, with the benchmark set to buck the historical trend of September being weaker for U.S. equities on average.
At 8:34 a.m. ET, Dow E-minis were up 28 points, or 0.07%, S&P 500 E-minis were down 7.75 points, or 0.13%, and Nasdaq 100 E-minis were down 30.75 points, or 0.15%.
Risk appetite got a boost earlier in the week after the Fed kicked off its easing cycle with a 50-basis-point cut and assured that more were on the way. The central bank also projected a period of steady economic growth and low unemployment and inflation.
"All you had (this week) was the Fed. The Fed's over. The rest of the world decided to buy the U.S. market and also bid up their markets ... and now this is the fade," said Jay Hatfield, portfolio manager at InfraCap.
"The most bullish thing that can happen after such a big run is a stall."
Traders now see a 59.7% probability of a 25 bps cut in November, as per the CME Group's FedWatch tool. Expectations are that rates will drop by 72 bps by year-end, as per LSEG data.
A strong majority of over 100 economists polled by Reuters said that the Fed will cut rates by 25 basis points in both November and December.
Philadelphia Fed President Patrick Harker's remarks will be parsed through later in the day in the absence of major economic data.
Some market volatility is expected in the day, as options and futures linked to stock indexes and individual stocks are set to expire simultaneously on the third Friday of the last month of the quarter, in an event called "triple witching".
Among top movers in premarket trading, FedEx
Nike
Trump Media & Technology
A rebalancing of the main indexes is also expected. Dell
dipped nearly 1%, Palantir Technologies
Historically, equities have performed well in a rate cutting cycle as lower borrowing costs could ease pressures on corporate profits. However, the outlook appears bleak with the S&P 500's valuations high above its longterm average.
(Reporting by Johann M Cherian and Purvi Agarwal in Bengaluru; Editing by Maju Samuel)