U.S. Stock Futures Edge Up on Optimism for Fed Rate Cut

U.S. stock index futures edged higher on Tuesday as traders bet on a September interest rate cut ahead of Federal Reserve Chair Jerome Powell’s Jackson Hole speech. The S&P 500 and Nasdaq saw their longest winning streaks this year, and bitcoin-related stocks also rose amid bullish forecasts.

In Tuesday's range-bound trading, U.S. stock index futures inched higher as anticipation solidified for a September interest rate cut ahead of Federal Reserve Chair Jerome Powell's upcoming speech at Jackson Hole.

This momentum followed Monday's session where the S&P 500 and the Nasdaq both extended their gains to an eighth consecutive session, marking their longest winning streak of the year. Robust consumer data despite a cooling economy has heightened expectations that the Fed might ease its monetary policy in its upcoming September meeting.

There is now a 75.5% probability that the Federal Reserve will lower interest rates by 25 basis points (bps) in September, a shift from last week's near even split between 50 bps and 25 bps. A recent Reuters poll indicates a majority of economists foresee a 25 bps cut at each of the remaining three meetings in 2024, one more than previously anticipated.

Nonetheless, Achilleas Georgolopoulos from forex broker XM cautioned that these forecasts might be overly optimistic. He noted analysts' expectations for Chairman Powell to adopt a dovish stance at the Jackson Hole Symposium, a scenario already factored into the market. Georgolopoulos warned of a potential acute market reaction should Powell maintain a balanced perspective.

Investors will scrutinize Powell's Friday speech for signs of a rate cut acknowledgment. Meanwhile, Atlanta Fed chief Raphael Bostic and Fed Vice Chair for Supervision Michael Barr are set to speak on Tuesday, with minutes from the Fed's latest meeting due on Wednesday. Early morning trading saw minor increases in Dow E-minis, S&P 500 E-minis, and Nasdaq 100 E-minis.

In stock-specific movements, Palo Alto Networks rose 2.1% in premarket trading following optimistic fiscal 2025 forecasts. Bitcoin and blockchain stocks climbed as bitcoin surged 3.1%, influencing gains for Coinbase Global, Riot Platforms, MicroStrategy, and ProShares Bitcoin Strategy ETF.

(With inputs from agencies.)