Sept 16 (Askume) – U.S. stock futures weakened on Monday as investors remained cautious ahead of a key monetary policy decision by the Federal Reserve later this week and expectations that borrowing costs will fall sharply.
Markets have been rallying since Federal Reserve Chair Jerome Powell signaled a rate cut late last year, with the S&P 500 (.SPX) and Dow Jones Industrial Average (.DJI) now close to all-time highs.
However, following a flood of economic data over the past few weeks and comments from prior policymakers, traders have begun to place bets on what the central bank will decide at its meeting on September 17-18.
According to the CME FedWatch tool, the probability of a 50 basis point rate cut rose to 59% from 30% a week ago, while the probability of a 25 basis point cut was 41%. There are concerns that the bigger measures could mean the Fed is considering cooling the economy faster.
“As important as the 25 vs. 50 debate is whether the Fed’s communication will lead to a 25 basis point increase in interest rates,” a team of Deutsche Bank strategists led by Jim Reid said in a report.
The benchmark and tech-heavy Nasdaq (.IXIC) posted its biggest weekly gain in nearly 11 months on Friday, though analysts attributed optimism to strong economic signals rather than expectations of an interest rate cut.
At 07:00 a.m. ET, the Dow E-mini index was up 85 points, or 0.21%, the S&P 500 E-mini index was up 2 points, or 0.03%, and the Nasdaq 100 E-mini index was down 38.5 points, or 0.21%.
Small-cap stocks tracking futures outperformed, rising 0.72%, while small-cap stocks held up well as borrowing costs eased. The Russell 2000 index (.RUT) has gained more than 7% so far this year and hit its highest level in more than a week on Friday.
On the economic data front, retail sales, weekly jobless claims, home construction and industrial production data will be released this week.
Among rate-sensitive growth stocks, Nvidia (NVDA.O) fell 0.9%, Meta (META.O) rose 0.15% and Tesla (TSLA.O) gained 0.44% in premarket trading.
Intel Corp (INTC.O) rose 2% after a report that the chip maker has officially received a $3.5 billion federal grant to produce semiconductors for the U.S. Department of Defense.
Shares of Trump Media & Technology (DJT.O) rose 3.7% on Sunday after a second assassination attempt on the Republican candidate and former president , just weeks before the US presidential election .
Cryptocurrency stocks also fell, with bitcoin down 2%, MicroStrategy (MSTR.O) down 2.2% and Riot Platform (RIOT.O) down 1.5% .
Aluminium producer Alcoa (AA.N) said on Sunday it would sell a 25.1% stake in its joint venture with Saudi Arabia’s Ma’aden for $1.1 billion, sending its shares up 1.4%.
