Nasdaq, S&P 500 Futures Rise Ahead Of Crucial Fed Meeting — Economist Says 50bps Cut Still Possible If This Happens

U.S. stock futures edged up early Tuesday as traders held onto hopes that the resumption of rate cuts by the Federal Reserve would reinvigorate the economy. The Commerce Department’s retail sales data, due before the market opens, and its implications for the economy may play in the minds of traders as they navigate an overbought market.

The Fed meeting gets underway on Tuesday, although the outcome of the meeting won’t be known until Wednesday. Senate confirmation of Trump’s nominee Stephen Miran removes one of the overhangs around the rate decision. WisdomTree Senior Economist Jeremy Siegel anticipates a 25-basis-point cut, aligning with market expectations. The economist sees “real potential” for dissent on both sides.

As of 3:45 a.m. ET on Tuesday, the Nasdaq 100 futures rose 0.26% and the S&P 500 futures climbed 0.10%, while the Dow futures and Russell 2000 futures were nearly unchanged.

Stocks rallied sharply on Monday, thanks to hopes of the U.S. clinching a trade deal with China and some stock-specific strength in companies such as Tesla (TSLA) and Oracle (ORCL). A regional manufacturing survey that showed an unexpected contraction added to evidence of economic softness, increasing hopes for a rate cut.

The S&P 500 Index closed at a fresh high, topping the 6,000 mark for the first time, while the Nasdaq Composite and the Nasdaq 100 also scaled new peaks. The Dow Jones Industrial Average, however, finished shy of its record.

The SPDR S&P 500 ETF (SPY), an exchange-traded fund (ETF) that tracks the S&P 500 Index, and the Invesco QQQ Trust (QQQ) rose 0.53% and 0.86%, respectively. The SPDR Dow Jones Industrial Average ETF Trust (DIA) and the Shares Russell 2000 ETF (IWM) added 0.16% and 0.42%, respectively.

On the economic front, the retail sales report for August is expected to show a slowdown in retail sales growth to 0.3% from 0.5% in July. Excluding autos, retail sales growth is expected to be a touch soft at 0.4% relative to 0.5% in July. Siegel said a 50 basis-point cut comes into play if the retail sales significantly disappoint. 

Traders may also focus on the Federal Reserve’s industrial production report for August, the import prices report for August, the business inventories report for August, and the National Home Builders Association’s housing market index for September.

Ferguson plc. (FERG) is scheduled to report its quarterly results on Tuesday.

Crude oil futures slipped early Tuesday, while gold futures continued to trade with strong upward momentum. The 10-year U.S. Treasury note yield moved tantalizingly closer to the 4% level.

The dollar slipped against most major currencies. 

Most major Asian markets advanced, taking cues from Wall Street, although they showed caution ahead of the Fed rate decision.

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