On June 12, 2024, after the New York Stock Exchange announced the Federal Reserve interest rate, the press conference held by Federal Reserve Chairman Jerome Powell was playing on the screen, and a trader was working.
Brendan McDermid | Reuters
Stock futures were flat in overnight trading on Tuesday as Wall Street expected the Federal Reserve to deliver a long-awaited rate cut after years of aggressive rate hikes aimed at curbing inflation.
Futures and Dow Jones Industrial Average An increase of 28 points, while S&P 500 Index Futures Hovering around the flat line. Futures and Nasdaq 100 It rose slightly by about 0.1%.
Wall Street just ended a mixed trading day S&P 500 Index It edged up 0.03% after hitting another all-time high in intraday trading. this Dow Jones Industrial Average Lost by nearly 16 points Nasdaq Index Add 0.2%.
Investors remain on high alert as the Federal Reserve is expected to cut interest rates for the first time at the end of its two-day policy meeting on Wednesday. This month’s meeting is considered one of the most important in years, as the Fed prepares to end a cycle of aggressive interest rate hikes that began in March 2022.
Rate cuts are generally good for corporate earnings growth and would provide welcome relief after a long period of high borrowing costs and sticky inflation. The rate-cutting cycle could also bring more gains to an already strong market and add to a record winning streak, with the S&P 500 up 18% this year. Since 1974, the index has gained an average of 6.4%, 9.8% and 15.6% in the three months, six months and 12 months following the first downward revision, according to Canaccord Genuity.
While a rate cut appears imminent, traders are divided on how large it will be. CME Group’s Fed Watch Tools show traders are pricing in a 63% chance of a 50 basis point cut and a 37% chance of a 25 basis point cut.
Despite these market expectations, some investors remain wary of cutting interest rates too quickly. Peter Cecchini, research director at Axonic Capital, said a 50-basis-point rate cut by the Federal Reserve is “unusual” given the current state of the housing market and is the first step in the Fed’s rate-cutting cycle.
“I don’t think the Fed needs to take a 50 basis point cut as a preemptive measure in the current environment, and it has never done that historically,” he told CNBC’s “Closing Bell” on Tuesday.