(Reuters) – U.S. stock futures advanced higher ahead of a Federal Reserve interest rate decision on Thursday, building on a sharp rally sparked by Donald Trump’s stunning comeback as U.S. president for a second time.
Traders have roughly fully priced in a 25 basis point rate cut, but will keep a close eye on the central bank’s policy statement for clues about the future path of monetary easing.
“Futures prices suggest today will be a much calmer day in US markets, albeit still with some gains,” said Russ Mould, investment director at AJ Bell.
“Investors may simply be taking stock of events and waiting to see the size of a Fed rate cut.”
Investor expectations that Trump would cut corporate taxes and ease regulations had pushed all three major indexes to record highs in the previous session.
The Dow Jones, S&P 500 and small-cap Russell 2000 posted their biggest single-day gains since November 2022, while the Nasdaq had its best day since February.
At 5:08 AM ET, the Dow E-minis were up 82 points, or 0.18%. The U.S. S&P 500 E-minis rose 11.5 points, or 0.19%, and the Nasdaq 100 E-minis rose 49 points, or 0.23%.
Futures tracking the small cap index rose 0.3% to trade at their highest level in almost three years.
Traders are betting the Fed will cut policy rates just twice in 2025 amid continued robust economic data and the likelihood of higher inflation from Trump’s proposed tariffs and government spending.
The focus is also on whether Republicans could retain control of the US House of Representatives after gaining a majority in the Senate, which would make it easier for Trump to implement the policy.
Meanwhile, interest rate-sensitive stocks could come under some pressure as US Treasury yields soared following Trump’s election. [MKTS/GLOB]
Some stocks that soared after his landslide victory gave back gains, with Trump Media & Technology losing 9.5% and Tesla down 0.7% after gaining nearly 15% on Wednesday.
Shares of Qualcomm rose 7.9% after the chipmaker forecast that sales and profit for the current quarter would beat Wall Street estimates.
The VIX, Wall Street’s “fear gauge,” was trading at a six-week low.
Weekly initial unemployment claims data are due at 8:30 a.m. ET.
(Reporting by Lisa Mattackal in Bengaluru; Editing by Arun Koyyur)
