Futures inch up in holiday-thinned week; focus on Fed's rate-cut plans

By Shashwat Chauhan and Sukriti Gupta

(Reuters) – U.S. stock index futures rose on Tuesday as investors watched for potential developments on the tariffs front as well as insights into the central bank’s interest-rate plans following last week’s drop in Treasury yields.

Minutes from the U.S. Federal Reserve’s January meeting, where it held interest rates unchanged between 4.25% and 4.5%, are due on Wednesday.

Fed Governor Christopher Waller said on Monday, when the U.S. markets were closed for the Presidents’ Day holiday, that his “baseline” view was that U.S. President Donald Trump’s new tariffs would have only a modest impact on prices.

Philadelphia Fed President Patrick Harker said he saw no reason for an imminent change in interest-rate policy.

Hawkish commentary from Fed Chair Jerome Powell in his semi-annual testimony to Congress, along with consumer prices and producer prices data last week, led to uncertainty over the Fed’s rate-cut plans this year.

Traders currently see at least one 25-basis-point rate cut and a 56% chance of an additional cut by December, according to LSEG data.

“Considering the Fed still views its monetary policy as restrictive — implying rate cuts will be needed at some point — we continue to expect easing in the second half of 2025 as inflation moderates over time,” Mark Haefele, chief investment officer at UBS Global Wealth Management, said in a note.

Friday’s weaker-than-expected retail sales reading pulled Treasury yields lower, likely keeping the U.S. central bank on track to cut borrowing costs this year.

Wall Street’s main stock indexes clocked weekly gains in the midst of a choppy period for global markets last week, as Trump’s imposition of tariffs on steel and aluminum imports, along with plans for reciprocal tariffs, sparked volatility.

Meanwhile, global risk-taking was boosted by speculations of a peace deal between Russia and Ukraine as Russian and U.S. officials met for bilateral talks in Saudi Arabia on Tuesday.

At 06:48 a.m. ET, Dow E-minis were up 49 points, or 0.11%, S&P 500 E-minis were up 18.75 points, or 0.31%, and Nasdaq 100 E-minis were up 74.75 points, or 0.34%.

Earnings season will begin to thin out this week, with more than 380 of the S&P 500 companies already having reported quarterly results.

Retail giant Walmart’s earnings, a bellwether to gauge how the American consumer is faring, are due later this week.

Most megacap and growth stocks ticked up in premarket trading, with Tesla outpacing the pack with a 0.9% advance.

Intel rose 6.1% after a report over the weekend said rivals Taiwan Semiconductor Manufacturing Co and Broadcom was each eyeing potential deals that could break the chipmaking icon in two.

Constellation Brands jumped 8.4% after Warren Buffett’s Berkshire Hathaway disclosed a new investment in the producer of alcoholic beverages on Friday.

Shares of telehealth firm Hims & Hers Health fell 2% after brokerage Morgan Stanley cut the stock to “equal-weight” from “overweight”.

(Reporting by Shashwat Chauhan and Sukriti Gupta in Bengaluru; Editing by Pooja Desai)