U.S. index futures are signaling a mostly flat open on Tuesday, suggesting that stocks may struggle to find direction following a session that ended with modest gains.
Traders appear cautious ahead of the Federal Reserve’s two-day policy meeting, which kicks off today.
While a 25-basis-point rate cut is widely anticipated, market participants will closely examine the Fed’s accompanying statement and updated economic projections for hints about the future path of interest rates.
CME Group’s FedWatch Tool currently shows a 96.0% probability of a quarter-point cut, with only a 4.0% chance of a half-point reduction.
Looking ahead, another 25-basis-point rate reduction is expected at both the October and December meetings, though Fed Chair Jerome Powell is likely to emphasize that future cuts will hinge on incoming economic data.
Futures remained largely unchanged even after the Commerce Department reported that retail sales in August rose far more than economists had forecast.
Retail sales climbed 0.6% in August, matching the upwardly revised gain from July. Analysts had anticipated a smaller increase of 0.2%, compared with the initially reported 0.5% growth for the prior month.
Stocks ended mostly higher on Monday, extending strong gains from the previous week. The Nasdaq and S&P 500 both closed at record levels, with the Nasdaq advancing 207.65 points, or 0.9%, to 22,348.75, and the S&P 500 up 30.99 points, or 0.5%, to 6,615.28. The Dow posted a smaller gain, rising 49.23 points, or 0.1%, to 45,883.45.
Market strength followed encouraging remarks from President Donald Trump regarding U.S.-China trade negotiations.
In a post on Truth Social, Trump said that the talks have “gone VERY WELL!” and added that a “deal was also reached on a ‘certain’ company that young people in our Country very much wanted to save,” likely referencing TikTok.
Trump also noted he plans to speak with Chinese President Xi Jinping on Friday, describing the relationship as “a very strong one.”
Investors remain focused on Wednesday’s Fed announcement, with expectations of at least a 25-basis-point rate cut fueled by recent data showing moderate inflation and a weakening labor market.
On Monday, computer hardware stocks were among the top performers, with the NYSE Arca Computer Hardware Index rising 2.5% to a record closing level. Networking stocks also performed well, reflected by a 2.3% gain in the NYSE Arca Networking Index.
Gold, steel, and software sectors saw notable strength, while airline, oil services, and housing stocks experienced downward pressure.
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