Stock market today: Wall Street makes early gains with all eyes on the Fed and an interest rate cut
Stock market today: Wall Street makes early gains with all eyes on the Fed and an interest rate cut
Wall Street followed global markets higher Tuesday in anticipation of what most expect will be the first interest rate cut this week by the Federal Reserve in more than four years.
Futures for the S&P 500 rose 0.3% before the bell, while futures for the Dow Jones Industrial Average ticked 0.2% higher.
Intel jumped more than 7% in premarket after the chipmaker announced it was expanding its partnership with Amazon Web Services in a multi-year, multi-billion dollar deal centered around Intel-made AI chips. Intel, which announced 15,000 layoffs last month after badly missing Wall Street profit targets, is aiming to save $10 billion in 2025. The company also plans to turn its struggling foundry business into a subsidiary.
Microsoft shares are almost 2% higher after announcing a share repurchase program of up to $60 billion and it raised its dividend by 10%, to 83 cents per share.
Markets have been eagerly awaiting the latest decision by the Fed, which is expected to cut its key rate for the first time since the pandemic crash of 2020 after keeping rates high to tamp down inflation. The main question is how much relief for the economy the Fed will deliver.
“The warning is that markets steeped in rich policy expectations are ripe for volatility,” Mizuho Bank said in a commentary. “Accordingly, it may be best to be braced for (policy) curveballs that could potentially force market re-pricing.”
Traders are shifting bets toward a larger-than-usual rate cut by the Fed of half a percentage point, according to data from CME Group. The difference between a half-point cut and a quarter may sound academic, but it can have far-ranging effects. Lower rates relieve pressure on the economy, but they can also fuel inflation.
Inflation has eased substantially from its peak two summers ago, and the Fed has said it can now focus on supporting the slowing job market and economy. Some critics say it may be moving too late, increasing the risk of a possible recession.
Apart from the Federal Reserve’s most anticipated meeting in years, which wraps up on Wednesday, traders also were awaiting U.S. retail sales data for August that will provide a glimpse into the mind of the U.S. consumer. Consumer spending has been the driving force behind the economy ‘s continued growth despite high interest rates.
Elsewhere, in Europe at midday Germany’s DAX and London’s FTSE 100 each climbed 0.6%. The CAC 40 in Paris was up 0.5%.
In Asian trading, Tokyo’s Nikkei index fell 1% to 36,203.22 and the Hang Seng in Hong Kong advanced 1.4% to 17,660.02.
Markets in mainland China and South Korea were closed.
Australia’s S&P/ASX 200 gained 0.2% to 8,140.90.
The dollar fell to 140.57 Japanese yen from 140.61 yen. The yen has strengthened against the dollar with expectations that the Bank of Japan will persist in raising rates after keeping them near zero for years, although it is expected to stand pat at its policy meeting this week.
“The Bank of Japan’s upcoming policy meeting is expected to reaffirm its commitment to gradual rate hikes, which could further bolster the yen soon,” Luca Santos, currency analyst at ACY Securities, said in a commentary.
The euro was stable, up to $1.1136 from $1.1135.
U.S. benchmark crude oil rose 9 cents to $70.18 a barrel. Brent crude, the international standard, shed 8 cents to $72.67 a barrel.
On Monday, the Dow rose 0.6% to surpass its prior all-time high set a few weeks ago, closing at 41,622.08. The S&P 500 index ticked up by 0.1% and the Nasdaq composite slipped 0.5%.
By ELAINE KURTENBACH and MATT OTT
AP Business Writers
