The major U.S. index futures are currently pointing to a higher open on Tuesday, with stocks likely to move to the upside following the mixed performance seen in the previous session.
Stocks are likely to benefit from optimism about the outlook for interest rates ahead of the Federal Reserve’s monetary policy announcement on Wednesday.
While the Fed is widely expected to lower interest rates, there remains some debate about the size of the rate cut.
CME Group’s FedWatch Tool is currently indicating a 67.0 percent chance of a half point rate cut and a 33.0 percent chance of a quarter point rate cut.
Whether the Fed decides to cut rates by 25 or 50 basis points, the central bank is still expected to continue lowering rates over the remainder of the year.
The futures remained positive following the release of a Commerce Department report unexpectedly showing a modest increase by U.S. retail sales in the month of August.
The Commerce Department said retail sales inched up by 0.1 percent in August after surging by an upwardly revised 1.1 percent in July.
The uptick surprised economists, who had expected retail sales to dip by 0.2 percent compared to the 1.0 percent jump originally reported for the previous month.
Excluding a slight pullback by sales by motor vehicle and parts dealers, retail sales still crept up by 0.1 percent in August after climbing by 0.4 percent in July. Ex-auto sales were expected to rise by 0.2 percent.
U.S. stocks ended on a mixed note on Monday as investors looked ahead to the Federal Reserve’s monetary policy announcement later this week and stayed largely cautious and selective with regard to their moves.
Among the major averages, the Dow hit a new record high and ended up 228.30 points or 0.6 percent at 41,622.08 and the S&P 500 settled at 5,633.09 with a small gain of 7.07 points or 0.1 percent, while the Nasdaq closed lower by 91.85 points or 0.5 percent at 17,592.13.
Oracle Corporation climbed more than 5 percent. Meta Platforms, Accenture, Cisco Systems and IBM also closed notably higher.
Bank of America, Wells Fargo, Goldman Sachs, JP Morgan Chase, Citigroup, Bank of America and Morgan Stanley posted strong gains. Visa Inc. and Mastercard also ended on a firm note.
Exxon Mobil Corporation and Chevron Corporation recorded impressive gains.
Procter & Gamble, Merck, Abbot Laboratories and Pfizer moved up sharply. T.Mobile, Linde, GE Aerospace, Verizon Communications, Blackstone, AT&T, Nike and Walt Disney also moved notably higher.
Tesla, Broadcom, Adobe Inc., Amazon, Nvidia Corporation, Apple Inc. and Intuit Inc. ended with sharp to moderate losses.
On the economic front, the Federal Reserve Bank of New York released a report showing regional manufacturing grew for the first time in nearly a year in the month of September.
The New York Fed said its general business conditions index surged to a positive 11.5 in September from a negative 4.7 in August, with a positive reading indicating growth. Economists had expected the index to inch up to a negative 3.9.
With the sharp increase, the index returned to positive territory for the first time since hitting a positive 9.1 last November.
The much bigger than expected increase by the headline index partly reflected a significant turnaround by new orders, as the new orders index spiked to a positive 9.4 in September from a negative 7.9 in August.