US futures flat as Fed comments cool rate cut optimism

Investing.com-- U.S. stock index futures moved little in evening deals on Thursday, tracking a weak finish on Wall Street as several Federal Reserve officials warned that bets on interest rate cuts were potentially premature. 

Some softer-than-expected consumer inflation readings drove Wall Street to record highs on Wednesday and Thursday. But indexes failed to hold those highs after the Fed warnings, while traders also slightly trimmed their expectations for a September rate cut.

S&P 500 Futures steadied at 5,320.50 points, while Nasdaq 100 Futures were flat at 18,653.0 points by 19:36 ET (23:36 GMT). Dow Jones Futures were flat at 40,017.0 points. 

A rebound in Treasury yields also weighed on stocks. 

Fed officials warn more confidence needed to cut 

A slew of Fed officials warned on Wednesday and Thursday that the central bank still needed more confidence to cut interest rates, and that the timing of the move remained uncertain. 

Atlanta Fed President Raphael Bostic welcomed the softer inflation data, but warned that one positive data point did not indicate a trend, and that no expectations for rate cuts were locked in by the central bank.

Before Bostic, New York Fed President John Williams said that while the development in consumer inflation was positive, it still did not warrant an immediate reduction in interest rates. 

Cleveland Fed President Loretta Mester said that the Fed needed to hold rates high for longer to bring inflation down, and that the central bank needed more evidence that price pressures were cooling.

All three Fed officials are voting members of the Fed's rate-setting committee.

Their comments saw investors second-guess expectations for rate cuts this year, with traders slightly paring bets on a 25 basis point reduction in September, according to the CME Fedwatch tool. 

Wall St loses steam after record highs

Persistent doubts over the rate cuts saw Wall Street close lower on Thursday after making record highs. The prospect of high for longer interest rates bodes poorly for stock valuations, especially in the technology sector.

The S&P 500 fell 0.2% to 5,297.10 points, while the NASDAQ Composite fell 0.3% to 16,698.32 points on Thursday. The Dow Jones Industrial Average fell 0.1% to 39,869.38 points.

Aftermarket movers: Reddit surges on OpenAI partnership

Among major after-hours movers, social media platform Reddit Inc (NYSE:RDDT) jumped over 11% after it entered a partnership with artificial intelligence major OpenAI to add its content to the firm’s AI products. 

Take-Two Interactive Software Inc (NASDAQ:TTWO) fell 2.6% after it issued disappointing annual earnings guidance, with the videogame publisher set to release its hotly awaited GTA VI title only in 2025. 

DXC Technology Co (NYSE:DXC) sank 20% after it also offered disappointing annual guidance. 

So-called meme stocks GameStop Corp (NYSE:GME) and AMC Entertainment Holdings Inc (NYSE:AMC) saw some relief in after-hours trade, rising 3.4% and 5.9%, respectively. The two plummeted between 15% and 30% on Thursday as a rebound rally ran dry.