U.S. futures suggest a largely flat start on Tuesday, as traders await direction following a session that ended on a broadly positive note.
Investors are taking a cautious stance ahead of the Federal Reserve’s two-day monetary policy meeting. The central bank is widely expected to cut interest rates by 25 basis points, but market participants will be scrutinizing the Fed’s statement and updated economic forecasts for guidance on the path of future rate changes.
According to CME Group’s FedWatch Tool, there is a 96.0% probability of a quarter-point cut and a 4.0% chance of a half-point reduction. Additional rate cuts of 25 basis points are anticipated in October and December, though Fed Chair Jerome Powell is expected to stress that further moves will depend on incoming economic data.
Futures saw little change even after the Commerce Department reported stronger-than-expected retail sales for August. Retail spending rose 0.6%, matching July’s revised increase, compared with forecasts of 0.2%.
On Monday, major indexes extended their upward momentum, with the Nasdaq closing at 22,348.75, up 207.65 points (0.9%), and the S&P 500 at 6,615.28, up 30.99 points (0.5%). The Dow gained 49.23 points (0.1%) to finish at 45,883.45.
Market optimism was bolstered by President Donald Trump’s comments on U.S.-China trade talks. On Truth Social, Trump said talks had “gone VERY WELL!” and added that a “deal was also reached on a ‘certain’ company that young people in our Country very much wanted to save,” referring to TikTok. He also noted he will speak with Chinese President Xi Jinping on Friday, calling the bilateral relationship “a very strong one.”
Investors are closely watching the Fed, with expectations of at least a 25-basis-point cut supported by signs of subdued inflation and a softening labor market.
Tech-related sectors were among Monday’s best performers. The NYSE Arca Computer Hardware Index surged 2.5% to a record close, while the NYSE Arca Networking Index rose 2.3%. Gold, steel, and software stocks also showed strength, whereas airlines, oil services, and housing names saw declines.
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