Dow Jones Today: Futures Higher as Tech Stocks Gain, Investors Prepare for Fed Rate Decision
Futures are pointing to a higher open for major U.S. indexes on Tuesday as tech stocks rise and investors position themselves ahead of tomorrow’s eagerly awaited Federal Reserve decision on interest rates.
Futures tied to the S&P 500 and Nasdaq 100 were up 0.4% and 0.6%, while those linked to the Dow Jones Industrial Average added 0.3%. The Dow closed at a record high on Monday, while the S&P 500 inched higher to extend its winning streak to six straight days. The Nasdaq, which closed higher every day last week, lost ground on Monday, weighed down by losses for Nvidia (NVDA) and Apple (AAPL).
Large-cap tech stocks were mostly higher in premarket trading Tuesday. Microsoft (MSFT) was up nearly 2% after the company late Monday announced a $60 billion stock buyback program and boosted its dividend. Nvidia, Amazon (AMZN), Meta Platforms (META), Alphabet (GOOGL) and Broadcom (AVGO) were also on the rise, while Apple was down slightly.
The big mover ahead of the bell was Intel (INTC), which surged more than 4% after CEO Pat Gelsinger provided an update on the company’s restructuring efforts, citing progress on cost cutting and unveiling plans to turn its chipmaking arm into a separate subsidiary. The company also said it would produce chips for Amazon and the U.S. military.
Investors are anxiously awaiting the Fed’s decision on interest rates, which will be delivered Wednesday afternoon, as market expectations have grown that the central bank could cut its influential fed funds rate by half a percentage point. Fed officials have indicated that rate cuts are coming as inflation has moderated and the labor market has weakened, but haven’t commented on the pace or depth of the easing.
As of Tuesday morning, traders were pricing in about a 67% chance of a half-percentage-point reduction in the benchmark rate, according to the CME Group’s FedWatch tool, which forecasts rate movements based on fed funds futures trading data. That’s little changed from Monday, but up from about 50% on Friday and 30% a week ago.
The lack of market consensus heading into a Fed meeting is unusual. Since the Fed normally doesn’t adjust rates by more than a quarter point, some analysts say that a half-point cut could needlessly send the signal that the Fed sees the possibility of a significant deterioration of the economy. Others say that a large cut is warranted, arguing the Fed has waited too long to begin easing policy.
The yield on 10-year Treasurys, which is closely correlated to expectations around interest rates, was up slightly to 3.64% after falling to its lowest level in more than a year at just below 3.60% earliy Tuesday.
Gold futures were down slightly at around $2,600 an ounce, after hitting a new record high on Monday. Bitcoin rose 2% to around $59,500.