U.S. Stock Markets Rally in Light of Fed Rate Cut

U.S. stock index futures rose on Wednesday, showing signs of recovery from the previous day’s decline on Wall Street, as investors eagerly anticipated the Federal Reserve’s long-awaited rate cut.

Markets have almost fully priced in a 25 basis point reduction at the conclusion of the Fed’s meeting on Wednesday. Attention will now shift to signals regarding the outlook for longer-term rates. The Federal Reserve is expected to adopt a significantly slower pace of rate cuts following the December reduction.

S&P 500 futures were up about 0.27% to 6,143.75, while Nasdaq 100 futures were up 0.23% to 22,365.25 points.

Meanwhile, Dow Jones futures rose to 44,083.00 points after the index posted its longest losing streak since 1978 on Tuesday.

Fed Poised to Cut Rates, Markets Scrutinize Retail Sales Data

Investors are set to analyze the Federal Reserve’s economic projections for the upcoming year and the comments from Chairman Jerome Powell. These insights will help assess the Fed’s long-term rate estimates, especially given the context of persistently high inflation, which is anticipated to rise further under President-elect Donald Trump’s proposed policies.

Market participants expect the central bank to signal a more gradual pace of rate reductions in 2025 as persistent inflation and a strong labor market continue to raise concerns.

Earlier in the day, data showed that retail sales increased by 0.7% in November, surpassing the 0.5% consensus estimate. The stronger-than-expected retail sales data highlights the ongoing resilience of the U.S. economy, as consumer spending remains robust despite challenges such as high interest rates and inflation. This strength is supported by a stable labor market and sound household finances.

Tech Drags Down Wall Street, Dow Jones Suffers Ninth Straight Decline

Wall Street indexes retreated on Tuesday, with the technology sector shedding some of its recent gains as investors exercised caution ahead of the Federal Reserve’s interest rate decision.

NVIDIA Corporation (NVDA) fell by approximately 1.2%, while Alphabet (GOOG) declined 0.5%.

The S&P 500 dropped 0.4% to 6,050.61 points, while the NASDAQ Composite lost 0.3% to 20,108.30 points. The Dow Jones Industrial Average ended 0.6% lower at 43,449.90 points.

Despite the Nasdaq reaching an all-time high on Monday and the S&P 500 accumulating significant gains this year, the Dow has faced persistent challenges. On Tuesday, it marked its ninth consecutive daily decline, the longest losing streak recorded since February 1978.