Stock futures rise as traders weigh Fed’s super-sized rate cut: Live updates

4 weeks ago 22

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A trader works on the trading floor at the New York Stock Exchange following the Federal Reserve rate announcement on Sept. 18, 2024.

Andrew Kelly | Reuters

U.S. stock futures rose Wednesday night as traders digested the Federal Reserve's earlier decision to lower interest rates by a half percentage point.

Dow Jones Industrial Average futures rose 166 points, or 0.4%. Futures tied to the S&P 500 climbed about 0.6%, while Nasdaq 100 futures added 0.9%.

The U.S. central bank slashed its overnight lending rate to a range of 4.75% to 5.00% from 5.25% to 5.5% on Wednesday, which came as a surprise to some investors who criticized the size of this initial cut. This is the first rate reduction delivered by the Fed in four years.

After seesawing for most of the afternoon, stocks ultimately closed Wednesday's session lower. Both the S&P 500 and 30-stock Dow initially rallied to new record highs right after the Fed announced its interest rate cut decision.

Tom Porcelli, chief U.S. economist at PGIM Fixed Income, attributed the market's Wednesday move lower to Powell's emphasis that an initial 50 basis point rate cut does not set the precedence for further drastic rate reductions to follow.

"The market was thinking to itself, 'If you go 50, another 50 has a high likelihood.' But I think he really dashed that idea to some extent. It's not that he thinks that's not going to happen, it's that he's not pre-committing to that to happen. That is the right call," Porcelli said.

Darden Restaurants, shipping giant FedEx and homebuilder Lennar will report their earnings Thursday. Traders will also watch out for August's existing home sales and the latest weekly jobless claims.

DoubleLine’s Gundlach says he expects more weak data, rate cuts to benefit small caps

DoubleLine Capital CEO Jeffrey Gundlach, who correctly called Wednesday's super-sized rate cut, said he believes the incoming economic data will show more signs of weakness in the U.S.

"I expect to see weaker economic data in coming reports, I still think there's a good shot that the history books will say September 2024 was the start of a recession," Gundlach said on CNBC's "Closing Bell."

As for the market impact from rate cuts, Gundlach believes the easing cycle could provide a bigger boost to small-cap stocks than their large-cap counterparts. That's because much of the S&P 500 companies have fixed-rate debt, while Gundlach estimated that 45% of the Russell 2000 companies, excluding financials, have floating-rate debt.

"I'm pretty sure that this fed cycle will create a much bigger tailwind for the Russell 2000 than the S&P 500," he said.

— Yun Li

Steelcase stock dips 10% on missed revenue expectations

Shares of Steelcase were last trading 10% lower Wednesday night after the furniture manufacturer missed analysts' second-quarter revenue expectations.

Steelcase reported revenue of $855.8 million in its latest quarter while Wall Street analysts had anticipated sales of $864.2 million, FactSet showed. The company also forecast third-quarter revenue in the range of $785 million and $810 million. Analysts had previously expected $812.1 million.

However, Steelcase's second-quarter adjusted earnings of 39 cents per share beat consensus estimates of 37 cents per share.

— Lisa Kailai Han