U.S. Stock Unchanged With Fed Meeting in Focus, Rate Cut Anticipated

U.S. stock index futures were little changed on Monday, as investors remained cautious ahead of this week’s Federal Reserve meeting, where there is a high likelihood that the Fed will begin a rate-cutting cycle.

Similarly, markets have been cautious after learning of a second assassination attempt against Republican presidential candidate Donald Trump; fortunately, the former president was unharmed.

Fed Meeting Approaching and Markets Appear to Be Divided on Rate Cut

The Federal Reserve is set to meet later this week and is expected to begin cutting interest rates, although market traders are currently divided over the size of the potential cut.

According to CME FedWatch, traders are currently pricing in a 50% chance of a 50 basis point cut and another 50% chance of a 25 basis point cut.

Wednesday’s decision is likely to signal the tone of the Fed’s plans to begin easing monetary policy at a time when it faces concerns about the cooling economy and the labor market, although the latest economic data indicate that inflation is stable.

Likewise, lower rates are expected to support equities in the coming months.

Dow Jones and S&P Hit All-Time Highs

Wall Street’s major indexes gained last week despite the inflation data, as technology stocks were supported by big-ticket buying and renewed interest in artificial intelligence.

Broader stocks likewise rose, with bets on interest rate cuts spurring buying in sectors that are economically sensitive.

The S&P 500 rose 4% the previous week, while the Dow Jones Industrial Average rose 2.6%, with both indexes near all-time highs.

The NASDAQ Composite index rose by almost 6%, although it remained below the highs reached at the beginning of the year.

Pfizer Gains After Trial Success

In the corporate sector, Pfizer (PFE) shares rose 0.6% before the markets opened, after the pharmaceutical company reported that its experimental drug to combat a disease that causes cancer patients to lose appetite and weight showed positive results in a mid-stage trial.

Boeing (BA) shares rose 0.3% before the markets opened after falling more than 3% on Friday. The 30,000-worker strike extended into its fourth day on Monday, and company and union negotiators are expected to resume labor contract talks on Tuesday.

Crude Oil Prices Rise Ahead of Fed Meeting

Crude oil prices rose on Monday ahead of this week’s expected Fed rate cut, although lingering demand concerns continued to limit any major hike. The U.S. central bank is likely to begin an easing cycle on Wednesday. Lower rates bode well for economic growth, which could help sustain U.S. fuel demand in the coming months.

However, Chinese economic data released over the weekend pointed to further economic weakness in the world’s largest oil importer. Meanwhile, Gulf of Mexico crude oil production resumed in the wake of Hurricane Francine, although nearly a fifth of crude production remained offline.