US pre-open: Futures flat as rate cut speculation builds

(Sharecast News) - Wall Street futures were little changed ahead of the bell on Monday as market participants look ahead to this week's Federal Reserve monetary policy meeting. As of 1230 GMT, the Dow Jones futures were 0.01%, while S&P 500 and Nasdaq-100 futures had the indices opening 0.07% and 0.19%, respectively.

The Dow closed 104.05 points higher on Friday as interest rate cut speculation continued to prop up equity markets, while the S&P 500 settled just below all-time highs.

Wall Street futures pushed higher ahead of the bell on Monday after the delayed release of September's core personal consumption expenditures index continued to buoy sentiment after coming in softer than expected. September's reading was one of the final major data points sceheduled for release before this week's Federal Reserve policy meeting.

Optimism has grown in recent weeks, with traders now pricing-in an 88% chance that the central bank will cut interest rates at its final gathering of the year, according to CME's FedWatch tool, up from less than 67% a month ago.

"The chances are the Fed cuts this week," said Saxo's Neil Wilson. "That was not the clear message from the Fed last time. After cutting in November, Fed chair Jay Powell cautioned that a further reduction in December was 'not a foregone conclusion'. But there have been softer labour market indicators since and on Friday the delayed September PCE inflation was lower than expected. I felt that the delay to the November CPI inflation report until after the Fed meeting this week was a sign that they would wait, but the market has other convictions.

"So, the immediate focus is on whether we get the cut and how policymakers swung amid what is an unusually wide disagreement among policymakers over the trajectory and terminus for rates. The key bit for the market will be in chair Powell's press conference - were there dissenters, and how do policymakers view the balance of risks between employment and inflation at 3%? The latest quarterly Summary of Economic Projections may be important. But the most important thing is really about next year - what does a new chair do? Can he/she really 'run it hot' in sync with the administration? These are questions that won't be answered by any economic forecasts (which are a less-than-reliable guess by policymakers at the best times). Following the mess of the government shutdown we are still trying to figure out what the US economy looks like now let alone what it will look like next year."

No major corporate earnings or data points were scheduled for release on Monday.









Reporing by Iain Gilbert at Sharecast.com