U.S. stock index futures showed a slight upward trend on Wednesday. Markets were anxiously awaiting the Federal Reserve's decision regarding interest rates and signals on their stance in 2025. The Fed is widely anticipated to lower interest rates by 25 basis points during its meeting, which is set to announce at 2 p.m. ET. With a rate cut already factored in, the Fed's summary of economic projections (SEP), including the "dot plot" of rate projections, and Chair Jerome Powell's comments will be closely watched for indications on the rate path for the next year.
Analysts' Perspectives on Fed's Actions
ING analysts stated that the prospect of fiscal stimulus under President-elect Donald Trump may lead to a scaling back of the expected rate cuts included in the dot plot projections. However, they still anticipate a 25 basis point cut at the meeting. They also doubt that the Fed will deviate from a generally cautious stance in its guidance.Wall Street's main indexes experienced a dip in Tuesday's session. The Dow recorded its ninth consecutive daily decline, marking its longest losing streak since February 1978. This was due to markets increasingly anticipating a more hawkish Fed next year, considering strong growth and persistent inflation that limit the case for steady rate cuts. U.S. Treasury yields have slightly increased with the change in Fed expectations, with the 10-year yield surpassing 4.4%.
Performance of Rate-Sensitive Megacap Stocks
Most rate-sensitive megacap stocks showed a slight increase in premarket trading. AI giant Nvidia rose 2.3% after hitting a two-month low on Tuesday. On the other hand, Tesla dropped 1.9% after a significant 14% increase in the last three sessions.At 7:00 a.m. ET, Dow E-minis were up 118 points, or 0.27%, S&P 500 E-minis were up 14.75 points, or 0.24%, and Nasdaq 100 E-minis were up 48.25 points, or 0.22%. Despite some uncertainties about future Fed policy, stocks are on track to end the year strongly. The S&P 500 is up nearly 27%, the Nasdaq is up nearly 34%, and the Dow is up over 15%. This rally was driven by technology companies that took advantage of the excitement around artificial intelligence, the potential for a lower rate environment, and hopes for pro-business policies from the incoming Trump administration.
Performance of Crypto-Focused Stocks
Crypto-focused stocks experienced a decline as bitcoin fell 2%. MARA Holdings dropped 1.2% and Riot Platforms fell 1.4%.Birkenstock edged higher after surpassing market expectations for its fourth-quarter results. The footwear maker's pricey sandals saw robust full-price sales in the U.S. and Asia, providing a boost to its stock.
