US stock futures drift lower with Fed rate decision in focus

U.S. stock index futures fell slightly on Monday evening as investors remained cautious before a Federal Reserve meeting this week, where the central bank is expected to cut rates but signal a slower pace of easing.

Futures steadied after a rally in technology stocks sparked some strength on Wall Street, with the Nasdaq hitting a record high. The Dow, on the other hand, clocked an eighth straight day of losses.

S&P 500 Futures fell 0.1% to 6,145.50 points, while Nasdaq 100 Futures fell 0.1% to 22,392.25 points by 18:25 ET (23:25 GMT). Dow Jones Futures fell 0.1% to 44,196.0 points.

Fed rate cut, outlook in focus
The central bank is widely expected to cut interest rates by 25 basis points at the conclusion of a two-day meeting on Wednesday.

While Wednesday’s rate cut appears to be largely priced in by markets, especially considering recent gains in Wall Street, focus will be chiefly on the central bank’s outlook on rates.

Investors are bracing for the Fed to signal a slower pace of easing in 2025 amid growing signs of sticky inflation and strength in the labor market- two major points of contention for the Fed.

Goldman Sachs analysts said in a recent note that they no longer expect a rate cut in January, and that the bank will cut rates by a slightly slower pace in the coming year.

Traders were seen pricing in a 81.9% chance the Fed will leave rates unchanged in January, CME Fedwatch showed.

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Beyond the Fed, focus this week is also on retail sales and industrial production data.

Tech gains boost Nasdaq, Dow lags
Major tech stocks extended their recent rally on Monday, driving the Nasdaq Composite to record highs. But the Dow lagged amid sustained aversion towards economically sensitive stocks, as investors remained uncertain over policy under incoming President Donald Trump.

Chips stocks rallied tracking Broadcom Inc (NASDAQ:AVGO), as the network chips maker extended a recent rally on strong artificial intelligence-fueled earnings and guidance. The prospect of lower rates in the near-term also boosted other heavyweight tech stocks, such as Apple Inc (NASDAQ:AAPL), Amazon.com Inc (NASDAQ:AMZN) and Alphabet Inc (NASDAQ:GOOGL).

The S&P 500 rose 0.4% to 6,074.08 points, while the NASDAQ Composite surged 1.2% to a record high of 20,173.74 points on Friday. The Dow Jones Industrial Average fell 0.3% to 43,717.48 points.