US stock futures steady with rate cuts in focus

Investing.com-- U.S. stock index futures steadied in Asian trade on Friday, as investors held on to expectations of lower interest rates ahead of a Federal Reserve meeting that could potentially herald a larger easing cycle. 

Wall Street indexes largely shrugged off some strong readings on consumer and producer inflation this week, with a rally in technology stocks, on renewed optimism over artificial intelligence, also factoring into gains. 

U.S. stocks also rose past some political uncertainty after a heated presidential debate between Donald Trump and Kamala Harris, where analysts saw Harris gaining an edge over the Republican candidate. 

S&P 500 Futures were flat at 5,603.25 points, while Nasdaq 100 Futures steadied at19,444.00 points by 21:58 ET (01:58 GMT). Dow Jones Futures rose 0.1% to 41,177.0 points. 

Fed set to cut rates, markets split between 25 or 50 bps decision

The central bank is widely expected to cut interest rates when it meets next week, although investors are split over whether it will cut rates by 25 or 50 basis points.

While sticky inflation data released this week saw expectations shift towards a 25 bps cut, some soft labor market data saw bets on a 50 bps cut come back into play. 

Traders were seen pricing in a 58% chance for a 25 bps, and a 42% chance of a 50 bps cut, CME Fedwatch showed. 

Next week’s decision is likely to mark the beginning of an easing cycle for the Fed, with the central bank expected to cut rates by at least 100 bps this year. But investors were now seeking more concrete cues on this front, given that while Fed officials have signaled potential rate reductions, they have not provided any clear cues on the scale of any planned cuts.

Wall St buoyed by tech gains

Still, the prospect of lower rates kept some risk appetite in play, while the dollar and Treasury yields retreated. 

Wall Street indexes were also buoyed by gains in technology stocks, as strong earnings and guidance from Oracle Corporation (NYSE:ORCL), along with positive signals on demand from NVIDIA Corporation (NASDAQ:NVDA), saw optimism over artificial intelligence come back into play. 

An element of bargain buying also aided tech, after the sector was heavily sold off over the past month. 

The S&P 500 rose 0.8% to 5,595.8 points, while the NASDAQ Composite rose 1% to 17,59.68 points. The Dow Jones Industrial Average rose 0.6% to 41,096.77 points. 

Wall Street indexes recovered from heavy losses logged last week, although they were still trading well below record highs hit earlier in the year.