Wall St Futures Steady As Dec Rate Cut Bets Increase; PCE Data Awaited

Wall Street index futures steadied on Tuesday evening after increasing conviction in a December interest rate cut by the Federal Reserve spurred strong gains during the main session.

But markets were seen turning slightly cautious before the release of key inflation data on Wednesday, which is likely to factor into the Fed's plans for rates.

A mixed performance in tech stocks also dampened some gains in Wall Street, as reports that Alphabet's Google was planning to produce its own artificial intelligence chips rattled shares of established chipmakers, especially market major Nvidia.

S&P 500 Futures were flat at 6,781.50 points, while Nasdaq 100 Futures were flat at 25,079.75 points by 18:45 ET (23:45 GMT). Dow Jones Futures steadied at 47,199.0 points.

Wall St ends higher on Alphabet boost; Dec rate cut bets grow even further

Futures steadied after a positive session on Wall Street, as risk appetite was boosted by the prospect of lower U.S. interest rates next month.

In-line producer inflation data and weaker-than-expected retail sales data for September also drove some hopes that inflation was cooling, which in turn gives the Fed more headroom to cut. Two Fed officials also spoke in support of a December easing since Friday.

Markets are pricing in a 80.2% chance the Fed will cut rates by 25 basis points during its December 9-10 meeting, up sharply from a 43.4% chance seen last week, CME Fedwatch showed.

Alphabet (NASDAQ:GOOGL) extended gains to a record high, while Meta Platforms Inc (NASDAQ:META) surged nearly 4% on a report that Meta and Google were in talks over using the latter's AI chips.

NVIDIA Corporation (NASDAQ:NVDA), however, extended its recent decline, falling 2.6% after briefly hitting a two-month low during the session. The chipmaker was also down 0.6% in aftermarket trade.

Smaller rival AMD (NASDAQ:AMD) slid 4.2% on Tuesday and lost another 1% in aftermarket trade. Other AI chips and server stocks also moved in a flat-to-low range, on concerns over competition from Google.

Tech and AI-linked stocks were nursing steep losses through November as investors fretted over a valuation bubble in the sector. Recent positive earnings from Nvidia did little to soothe said concerns.

The S&P 500 rose 0.9% to 6,765.88 points. The NASDAQ Composite rose 0.7% to 23,025.59 points, while the Dow Jones Industrial Average rose 1.4% to 47,112.14 points on Tuesday.

PCE inflation data awaited for more Fed cues

Focus on Wednesday will be squarely on PCE price index data for September.

The print is the preferred inflation gauge of the Fed, and is expected to offer the most definitive cues on U.S. inflation before the Fed meets in December. Core PCE inflation is expected to read well above the Fed's 2% annual target.

But some Fed officials said that cutting rates to support the labor market took precedence over inflation, and that price pressures are also expected to cool further in the coming months.

Still, the central bank is unlikely to have any official readings for October going into December's meeting. This notion had fueled earlier expectations for a hold.

Source: Investing