Wall St set for subdued open as investors pause after rate cut-fuelled rally
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Poll: Fed to cut rates by 25 bps in Nov and Dec
FedEx falls on quarterly profit drop, forecast trim
Nike jumps after appointing new CEO
Futures: Dow up 0.07%, S&P 500 down 0.13%, Nasdaq off 0.15%
Updated at 8:34 a.m. ET/1234 GMT
By Johann M Cherian and Purvi Agarwal
Sept 20 (Reuters) - Wall Street's main indexes were set for a muted open on Friday as investors held back after a rally in the previous session that was sparked by an oversized interest rate cut by the Federal Reserve.
The S&P 500 .SPX notched its eighth session of gains out of nine on Thursday and closed at an all-time high, breaching its mid-July milestone.The blue-chip Dow .DJI also notched a record high and settled above the psychological level of 42,000 points.
All three major indexesare on track for weekly gains of over 1%, with the benchmark set tobuck the historical trend of Septemberbeing weaker forU.S. equities on average.
At 8:34 a.m. ET, Dow E-minis 1YMcv1 were up 28 points, or 0.07%, S&P 500 E-minis EScv1 were down 7.75 points, or 0.13%, and Nasdaq 100 E-minis NQcv1 were down 30.75 points, or 0.15%.
Risk appetite got a boost earlier in the week after the Fed kicked off its easing cycle with a 50-basis-point cut and assured that more were on the way. The central bank also projected a period of steady economic growth and low unemployment and inflation.
"All you had (this week) was the Fed. The Fed's over. The rest of the world decided to buy the U.S. market and also bid up their markets ... and now this is the fade," said Jay Hatfield, portfolio manager at InfraCap.
"The most bullish thing that can happen after such a big run is a stall."
Traders now see a 59.7% probability of a 25 bps cut in November, as per the CME Group's FedWatch tool. Expectations are that rates will drop by 72 bps by year-end, as per LSEG data.
A strong majority of over 100 economists polled by Reuters said that the Fed willcut rates by 25 basis points in both November and December.
Philadelphia Fed President Patrick Harker's remarks will be parsed throughlater in the day in the absence of major economic data.
Some market volatility is expected in the day, as options and futures linked to stock indexes and individual stocks are set to expire simultaneously on the third Friday of the last month of the quarter, in an event called "triple witching".
Among top movers in premarket trading, FedEx FDX.N plunged 13.2% after the postal service company, often seen as a bellwether to the U.S. economy, reported a steep drop in quarterlyprofit and lowered its full-year revenue forecast. Rival United Parcel Service UPS.N slipped 2.1%.
Nike NKE.N jumped 7.8% after the sportswear giant said that former senior executive Elliott Hill will rejoin the company to succeed John Donahoe as president and CEO.
Trump Media & Technology shares DJT.O, majority owned by former U.S. President Donald Trump, fell 5.2% after the expiry of its lock-up period that lifts restrictions on insiders to sell the company's stock.
A rebalancing of the main indexes is alsoexpected. Dell DELL.N dipped nearly 1%, Palantir Technologies PLTR.N fell 2.4% with the stocks expected to join the S&P 500 before the market opens on Sept. 23.
Historically, equities have performed well in a rate cutting cycle as lower borrowing costs could ease pressures on corporate profits. However, the outlook appears bleak with the S&P 500's valuations high above its longterm average.
Fund flows: U.S. equity sector funds https://tmsnrt.rs/40SDRqx
Reporting by Johann M Cherian and Purvi Agarwal in Bengaluru; Editing by Maju Samuel
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