US stock futures were slightly higher on Sunday night as investors await this week’s final Federal Reserve meeting of 2023 for any signals on when the central bankers will start cutting interest rates.
Futures linked to the Dow Jones Industrial Average were up 22 points, or 0.06%. S&P and Nasdaq 100 futures were both up less than 0.1%.
This year’s rally in equities is widely expected to continue, with investors increasingly optimistic about further gains after noting the recent diversification within the rally. Gains in the Magnificent 7 group of tech stocks have slowed relative to this year’s laggards, such as healthcare and small-cap companies.
The S&P 500 and the tech-heavy Nasdaq Composite both ended Friday on a six-week winning streak, up 0.2% and 0.7% respectively. The Dow, however, was flat for the week.
Sentiment was also boosted by the central bank’s efforts to reduce inflation, which have been more successful than many Fed officials and investors had expected. The University of Michigan’s latest consumer sentiment survey, released on Friday, showed that consumers’ fears of inflation fell sharply in December while their optimism rose.
At the Fed’s meeting on Wednesday, Chairman Jerome Powell is expected to keep the benchmark interest rate steady in the 5.25%-5.5% range, where it’s been since July. Powell is also expected to reiterate his commitment to lowering inflation in his press conference on Wednesday. Already, the CME Group’s FedWatch tool suggests that markets are pricing in a 45% chance that the Fed will cut rates by 0.25 percentage points in March.
“Investors should be hoping that we stay higher where we are for longer and the Fed could just pause, take a nap for a while while the market adjusts to the higher rates we’ve had for the last year and a half or so,” Ken Mahoney, chief executive officer of Mahoney Asset Management, told CNBC earlier this week.
Investors are also looking ahead to key inflation data, which could influence market movements and the Fed’s decision to cut rates. The Consumer Price Index for November is due on Tuesday, while the Producer Price Index is due on Wednesday.
On the earnings front, Oracle reports on Monday, Adobe on Wednesday and Costco Wholesale on Thursday.
