U.S. stock futures displayed minimal movement on Monday as investors eagerly awaited the conclusion of the Federal Reserve’s last meeting of the year, looking for clues on the timing of interest rate cuts.
Futures tied to the Dow Jones Industrial Average experienced a slight decline of 16 points or 0.04%. Similarly, S&P futures remained relatively flat, while Nasdaq 100 futures dipped slightly by 0.16%.
Market expectations suggest that this year’s impressive equity boom will persist, with investors growing more optimistic after observing a diversification trend within the rally. The dominant tech stocks in the market, known as the “Magnificent 7,” have experienced slower gains compared to other sectors, such as healthcare and small-cap companies, which have caught up in performance.
The S&P 500 and the technology-heavy Nasdaq Composite both closed last Friday with a six-week winning streak, recording gains of 0.2% and 0.7%, respectively. In contrast, the Dow remained unchanged for the week.
Investor sentiment has been bolstered by the Federal Reserve’s successful efforts to counter inflation, surpassing expectations set by Fed officials and investors. According to the latest University of Michigan consumer sentiment survey released on Friday, consumer fears of inflation have decreased while consumer optimism has surged.
Federal Reserve Chair Jerome Powell is anticipated to maintain the key fed funds rate within the range of 5.25%-5.5% during the policy meeting on Wednesday. In his subsequent press conference, Powell is expected to reiterate his commitment to combatting inflation. Market indicators, such as the CME Group’s FedWatch tool, currently suggest a 45% chance of a 0.25 percentage point rate cut in March.
Ken Mahoney, CEO of Mahoney Asset Management, shared his perspective on the matter, stating, “Investors should hope that we stay at the current higher rate for a longer period, allowing the Fed to potentially pause and adjust to the higher rates we have witnessed over the past year and a half.”
Source (CNBC)
