Market Anticipation Heightens Ahead of Fed Decision

U.S. stock index futures edged higher on Monday as investors remained cautious ahead of the Federal Reserve's vital monetary policy decision. Market predictions vary on the degree of the expected rate cut, impacting various sectors differently, including tech, retail, and cryptocurrency.

On Monday, U.S. stock index futures hovered from flat to slightly higher as investors maintained a cautious stance ahead of an important Federal Reserve monetary policy decision expected later in the week. Market players are pricing in a significant reduction in borrowing costs.

Since Fed Chair Jerome Powell suggested a potential rate cut last year, markets have surged, with the S&P 500 and Dow approaching record highs. However, mixed economic data and recent comments from a former policymaker have left traders uncertain about the Fed's upcoming decision on September 17-18.

Odds for a 50-basis-point cut stand at 59%, up from 30% a week ago, according to the CME FedWatch Tool. Meanwhile, the probability for a 25-basis-point reduction is at 41%. Analysts note that a larger cut could signal faster economic cooling. Deutsche Bank strategists, led by Jim Reid, highlight the importance of the Fed's communication regarding future rate adjustments.

Last Friday, major indices like the S&P 500 and tech-heavy Nasdaq experienced their largest weekly jumps in 11 months, driven by signs of a robust economy instead of rate-cut expectations. Early Monday, Dow E-minis rose 95 points, or 0.23%, alongside modest gains in S&P 500 and Nasdaq 100 E-minis.

Small caps, sensitive to interest rates, outperformed with a 0.90% rise. The week's economic data is light, featuring updates on retail sales, jobless claims, housing starts, and industrial production.

In premarket trading, rate-sensitive growth stocks showed varied performance. Nvidia slipped by 0.40%, whereas Meta and Tesla registered slight gains. Intel Corp soared 3.7% after being approved for up to $3.5 billion in federal grants for semiconductor manufacturing for the Department of Defense.

Trump Media & Technology rose 4.5% following news of a second assassination attempt on the Republican candidate and former president, weeks ahead of the presidential election. Crypto stocks saw a downward trend, with Microstrategy and Riot Platforms tracking a decline in bitcoin prices.

(With inputs from agencies.)