Futures muted after S&P’s eight-day winning streak; Fed in focus

By Shashwat Chauhan and Johann M Cherian

(Reuters) -U.S. stock index futures were muted on Tuesday, as bets on a September interest rate cut firmed ahead of the release of minutes from the Federal Reserve’s latest meet and Chair Jerome Powell’s speech at Jackson Hole later this week.

The and the Nasdaq extended gains to an eighth straight session on Monday, their longest winning streak so far this year, after a recent set of data raised optimism about the economic health, boosting expectations of a rate cut when the Fed meets in September.

Investors have been worried about a recession after a recent report pointed to a rise in unemployment in the world’s largest economy, triggering a selloff in stock markets globally earlier in the month.

At 07:10 a.m. ET, Dow E-minis were down 11 points, or 0.03%, S&P 500 E-minis were up 6 points, or 0.1%, and E-minis were up 26.25 points, or 0.13%.

Traders currently see a 75.5% chance of the Fed cutting interest rates by 25 basis points (bps) in September, compared with a near-even split between a 50 and 25 bps cut seen a week ago, according to the CME FedWatch Tool.

As per a slim majority of economists polled by Reuters, the U.S. central bank will cut interest rates by 25 bps at each of the remaining three meetings of 2024, one more reduction than predicted last month.

Achilleas Georgolopoulos, an investment analyst at forex broker XM, however, sounded a note of caution.

“(The) forecasts are relatively aggressive considering the state of the U.S. economy and potentially reveal analysts’ expectations that Chairman Powell will be relatively dovish at the Jackson Hole Symposium,” Georgolopoulos said.

“This is probably the main market scenario currently priced in, which increases the possibility of an acute market reaction if Powell repeats his balanced view and fails to appear dovish.”

Traders are on watch for any hints from Powell of a rate cut at the upcoming Fed meeting in September when he delivers his speech at the annual economic symposium in Jackson Hole on Friday.

Atlanta Fed chief Raphael Bostic and Fed Vice Chair for Supervision Michael Barr will speak later on Tuesday. Minutes from the Fed’s last policy meeting are due on Wednesday.

Among individual premarket movers, Palo Alto Networks (NASDAQ:) gained 2.5% after the company forecast fiscal 2025 revenue and profit above estimates, a sign of growing demand for its cybersecurity products as the digital threat landscape evolves.

Cryptocurrency and blockchain-related stocks such as those of MicroStrategy, Coinbase (NASDAQ:) Global and Riot Platforms (NASDAQ:) added between 2.2% and 3.2% as bitcoin prices rose 2.6%.

Boeing (NYSE:) slipped 1.2% after the airline maker stopped test flights of its 777-9 models as it awaits certification after a component between engine and airplane structure failed to perform during a maintenance check.

Lowe’s (NYSE:) cut its annual profit and sales forecasts, as economic concerns keep consumers from splurging on pricy home improvements. Shares of the home improvement retailer were volatile and were last flat.