U.S. 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 central bankers will begin to cut interest rates.
Futures tied to the Dow Jones Industrial Average added 22 points, or 0.06%. S&P futures and Nasdaq 100 futures both advanced less than 0.1%.
This year’s boom in equities is widely expected to continue, with investors becoming increasingly optimistic about further gains after noticing recent diversification within the rally. Gains from the Magnificent 7 group of tech stocks have slowed in comparison to this year’s laggards, such as health care and small-cap companies.
The S&P 500 and the tech-heavy Nasdaq Composite both closed Friday with a six-week winning streak, gaining 0.2% and 0.7%, respectively. The Dow, meanwhile, was flat for the week.
Sentiment has also been boosted by the central bank’s efforts to bring down inflation, which have been more successful than many Fed officials and investors had anticipated. Consumer fears over inflation plunged in December while consumer optimism jumped, according to the latest University of Michigan consumer sentiment survey released on Friday.
During the Fed’s policy meeting on Wednesday, Chair Jerome Powell is expected to maintain the key fed funds 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 is indicating that markets are pricing in a 45% likelihood in March that the Fed will lower rates by 0.25 percentage points
“Investors should hope that we stay higher, where we are now, for longer, and the Fed could just pause, snooze, for some time as the market adjusts to the higher rates we’ve had for the last year and a half or so,” Ken Mahoney, chief executive officer at Mahoney Asset Management, told CNBC earlier this week.
Investors are also looking ahead to key inflation data, which could impact market movements and rate-cut decisions made by the Fed. The November consumer price index is due out on Tuesday, while the producer price index is set for release on Wednesday.
On the earnings front, Oracle will report on Monday, while Adobe will post on Wednesday and big-box retailer Costco Wholesale on Thursday.
