Futures subdued as investors focus on economic data, Fed rate clues

Reuters

Futures subdued as investors focus on economic data, Fed rate clues

Sep 25, 2024 at 11:36 am GMT

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KB Home falls after Q3 profit misses estimates

Hewlett Packard gains after Barclays lifts rating on stock

Futures: Dow up 0.05%, S&P 500 off 0.02%, Nasdaq slips 0.16%

Updated at 07:06 a.m. ET/1106 GMT

By Johann M Cherian and Purvi Agarwal

Sept 25 (Reuters) - U.S. stock index futures were subdued onWednesday, with investors cautiousas they awaited more clues on the health of the economyand the outlook for interest rate cuts afterthe Federal Reserve kicked off its policy easing cycle a week ago.

The benchmark S&P 500 .SPX and the Dow .DJI closed at record highs for the second straight time in the previous session, with most of the heavy lifting done by mining stocksafter China unveiled a large stimulus package.

However, a weak consumer sentiment report sparked concerns aboutthe labor market's health among investors who are worried if the Fed's decision to cut rates by a rare 50 basis points in the previous week was due to a sharp slowdown in the economy.

"There is uncertainty about what the Fed's main driver now is – bringing inflation to target or stopping a deeper economic slowdown and what that will mean for the direction of rates," Susannah Streeter, head of money and markets, Hargreaves Lansdown, said in a note.

Odds that the central bank will lower borrowing costs by another 50 basis points at its November meeting have ticked up to 58.1%, from a coin toss earlier in the week, as per the CME Group's FedWatch Tool. Traders see borrowing costs falling by nearly 79 bps before the year ends, as per LSEG data.

Yield on long-term Treasury bonds US30YT=RR, US10YT=RR ticked up on worries that looser financial conditions could re-ignite inflation. US/

At 7:06 a.m. ET, Dow E-minis 1YMcv1 were up 22 points, or 0.05%, S&P 500 E-minis EScv1 were down 1 point, or 0.02% and Nasdaq 100 E-minis NQcv1 were down 33.25 points, or 0.16%.

Wall Street's main indexes have rallied this yearon expectations of interest rate cuts and on optimism that artificial intelligence integration could boost corporate profits.

The S&P 500 is also trading at valuations high above longterm averages, and analysts forecast further upside momentum for stocks to be weak.

On the day, data on new home sales for August are expected at 10:00 a.m. ET. However, the next test for markets will be weekly jobless claims and personal consumption expenditure data for August due later in the week.

Remarks from Fed GovernorAdriana Kugler, due after markets close, will also be parsed. But the spotlight will remain on Chair Jerome Powell's speech at the New York Treasury Market Conference on Thursday.

Among major premarket movers, KB Home KBH.N fell 7.1% after the homebuilder missed Wall Street expectations for third-quarter profit.

Tyson Foods TSN.N lost 1.4% after Piper Sandler downgraded the meatpacker to "underweight" from "neutral", while Hewlett Packard Enterprise rose 2.3% after Barclays raised its rating on the stock to "overweight" from "equal-weight".

U.S.-listed shares of Chinese companies slipped after surging in the previous session. Some analysts flagged that the massive stimulus package the country announced on Tuesday might not immediately spur up weak domestic demand.

Alibaba BABA.N lost 2.6%, Li Auto LI.O dropped 2.5% and JD.com JD.O slid 3.8%.

Reporting by Johann M Cherian and Purvi Agarwal in Bengalurul Editing by Maju Samuel

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