Futures move higher in run-up to Fed rate decision

Reuters

Futures move higher in run-up to Fed rate decision

Dec 18, 2024 at 12:30 pm GMT

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Fed's rate decision expected at 2:00 p.m. ET

Merck rises after signing up to $2 bln obesity drug deal

Futures up: Dow 0.27%, S&P 500 0.24%, Nasdaq 0.22%

Updates with prices

By Lisa Pauline Mattackal and Purvi Agarwal

Dec 18 (Reuters) -U.S. stock index futures edged up onWednesday, as markets eagerly awaitedthe Federal Reserve's final rate decision of the year and signals on whether policymakers will take a more cautious stance in 2025.

The Fed is widely expected to reduce interest rates by 25 basis points at its meeting. The announcement is expected at 2 p.m. ET on Wednesday.

With a rate cut broadly priced in, the Fed's summary of economic projections (SEP), which includes the "dot plot" of rate projections, and comments from Chair Jerome Powell will be in focus for indications on the rate path in 2025.

"The prospect of fiscal stimulus among other promised policies by U.S. President-elect Donald Trump will, in our view, force some scaling back in expected rate cuts included in dot plot projections," ING analysts said, adding they still expected a 25 basis point cut at the meeting.

"We doubt the Fed will derail from a generally cautious stance on guidance."

Wall Street's main indexes had dipped in Tuesday's session, with the Dow notching its ninth straight daily decline, its longest losing streak since February 1978, as markets increasingly look for a more hawkish Fed next year on the back of strong growth and persistent inflation limiting thecase for steady rate cuts.

U.S. Treasury yields have ticked higher with the change inFed expectations, with the 10-year yield US10YT=RR up past 4.4%.

Most rate-sensitive megacap stocks ticked higher in premarket trading, with AI giant Nvidia NVDA.O up 2.3% after hitting an over two-month low on Tuesday.

Tesla TSLA.O, meanwhile, dropped 1.9% after rising over 14% in the last three sessions.

At 7:00 a.m. ET, Dow E-minis 1YMcv1 were up 118 points, or 0.27%, S&P 500 E-minis EScv1 were up 14.75 points, or 0.24% and Nasdaq 100 E-minis NQcv1 were up 48.25 points, or 0.22%.

Still, despite some jitters over future Fed policy, stocks are on track to end the year strong with the S&P 500 up nearly 27%, the Nasdaq up nearly 34% and the Dow up over 15%.

The rally was fueled by technology companies that capitalized on the euphoria around artificial intelligence, the prospects of a lower rate environment and hope of pro-business policies from the incoming Donald Trump administration.

Crypto-focused stocks slipped as bitcoin BTC= fell 2%. MARA Holdings MARA.O was down 1.2% and Riot Platforms RIOT.O fell 1.4%.

Birkenstock BIRK.N edged higher after beating market expectations for fourth-quarter results, helped by robust full-price sales of the footwear maker's pricey sandals in the U.S. and Asia.

Merck MRK.N gained 1.6% after the drugmakersigned a deal worth up to $2 billion with Hansoh Pharmaceuticals 3692.HK to develop and commercialize the Chinese biotech's experimental obesity drug.

General Mills GIS.N was up 2% after the Cheerios makerbeat quarterly sales estimates, aided by its efforts to reduce prices of some products to improve demand.

Reporting by Lisa Mattackal and Purvi Agarwal in Bengaluru; Editing by Maju Samuel

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