As we kick off the week, US stock futures are experiencing a mixed start, reflecting the caution lingering in the air ahead of a pivotal week dominated by speculation surrounding the Federal Reserve’s anticipated interest-rate cut – the first in four years.
While Dow Jones Industrial Average futures are up 0.2%, S&P 500 futures are holding steady after recent strong gains that have been inching closer to new record highs. On the other hand, Nasdaq 100 contracts are down 0.2%, showing a slight dip in tech stocks.
Investors are currently on edge as they try to anticipate the Fed’s upcoming monetary policy decision on Wednesday after its two-day meeting. The prevailing sentiment suggests that the Fed may opt for a more substantial 50 basis point cut, a move that would signify a drastic shift from its previous tightening stance aimed at curbing inflation.
Speculation abounds regarding how aggressively the Fed will lower rates – whether by 0.5% or 0.25%. While a half-point cut could potentially safeguard the labor market and mitigate recession risks, it also runs the risk of alarming investors by signaling a gloomy economic outlook.
As of today, traders are giving a 59% probability to an outsized rate cut, up from 50% just a day ago. The likelihood of a 25 basis point cut currently stands at 41%, according to the CME FedWatch tool.
At Extreme Investor Network, we understand the significance of these developments and the impact they may have on your investment strategy. Stay tuned for our expert analysis and recommendations as we navigate through this crucial week in the world of finance.