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U.S. equity futures were mixed in early Monday trading, while the dollar extended its recent run of declines and Treasury yields held steady, as investors adopted a cautious stance ahead of a crucial Federal Reserve rate decision later in the week.
Stocks closed out Friday with their strongest weekly gain of the year, with the S&P 500 adding around $1.8 trillion in value to trim its overall September decline to around 0.4% thanks in part to renewed bets on a big Fed rate cut and solid signals on the health of the U.S. consumer.
Tech stock performance was solid, as well, with the Nasdaq rising 5.95% in its best week of the year to pare its monthly decline to just 0.17%, thanks in part to big rebounds for Nvidia (NVDA) and Microsoft (MSFT) .
Focus this week, however, will be firmly on the Fed’s two-day rate meeting, which wraps up Wednesday with the central bank’s September rate decision as well as fresh growth and inflation projects that will form the basis for its expected policy path over the final months of the year.
Market focus is fixed firmly on the Federal Reserve’s two-day policy meeting, which begins Tuesday in Washington.
Andrew Harnik/Getty Images
Both the Bank of England and the Bank of Japan will published key rate decisions on Thursday in London and Tokyo, as well.
The CME Group’s FedWatch pegs the odds of a 50 basis point rate cut from the Fed at around 59% heading into the week, and sees at least two more quarter point cuts in November and December.
Related: Markets push for big Fed rate cut after inflation reports
Longer-term, markets are also betting on sustained Fed rate easing into 2025, with the gap between 2-year Treasury note yields and the current Fed Funds rate trading at the widest levels in more than three decades.
“The bigger question is whether the market has been a bit optimistic about the scale of rate cuts over the next 12 months, with rates expected to be around 3% in a year’s time, down from the current level of 5.3%,” said Lindsay James, an investment strategist at Quilter Investors.
“It appears that the market has already priced in the full potential for rate cuts in the year ahead, though this may not materialize if inflation were to spike again,” she added. “While the US economy currently looks likely to avoid recession, some caution is still warranted.”
Benchmark 2-year notes were last seen trading at 3.557% heading into the start of the New York session, with 10-year note yields holding at 3.646%.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.4% lower at 100.711, the lowest in more than eight months.
On Wall Street, futures contracts tied to the S&P 500 suggest a modest 4 point opening bell gain for the benchmark, with the Dow Jones Industrial Average called around 75 points higher.
The tech-focused Nasdaq is priced for a 10 point dip, thanks in part to premarket declines for Nvidia and Apple (AAPL) .
Related: Gas prices are plunging and it’s bigger news than you think
Other stocks on the move include Intel (INTC) , which rose 3.2% following a Bloomberg report that suggested the chipmaker had qualified for a $3.5 billion grant from the U.S Department of Defense.
Trump Media & Technology (DJT) shares were last seen trading 3.5% higher following news of a potential assassination threat to former President Donald Trump Sunday at a gold course in Florida.
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Analyst says Intel should drop a key business to surviveAnalysts adjust Bookings.com stock price target on travel marketAnalysts place bets on Las Vegas strip casino stocks
In overseas markets, stocks traded cautiously in Europe, with the regional Stoxx 600 benchmark rising 0.05% in early Frankfurt trading and the FTSE 100 slipped 0.15% in London.
Overnight in Asia, markets in Japan were closed for that country’s ‘Respect for the Aged’ day holiday, while the region-wide MSCI ex-Japan index rose 0.49% higher into the close of trading.
Related: Veteran fund manager sees world of pain coming for stocks
