U.S. stock index futures edged lower on Friday, taking a breather after a sharp rally powered by a sweeping Trump win and an expected interest-rate cut took the S&P 500 futures above the 6,000 mark for the first time.
It surpassed the psychologically important milestone on Thursday on expectations of an easier regulatory regime under President-elect Donald Trump, with lower borrowing costs boosting the sentiment.
The Fed cut the benchmark rate by 25 basis points as Chair Jerome Powell said the election outcome would not have a “near-term” impact on monetary policy.
“Strong earnings and economic growth, coupled with the forceful ‘Fed put’, (are) set to continue to propel the market higher over the medium term,” said Michael Brown, senior research strategist at Pepperstone.
“Cleaner positioning after participants hedged their books pre-election, and expectations of Trump’s anticipated tax cuts and fiscal stimulus, is helping to further juice the upside in risk.”
However, Trump’s fiscally expansive spending plans and proposed tariff hikes could push up inflation, complicating the Fed’s policy path.
The Fed chief said the central bank would begin estimating the impact on its twin goals of stable inflation and maximum employment when the new administration’s proposals take shape.
Traders have already trimmed expectations for rate cuts next year, and bond yields have jumped to multi-month highs.
Still, the immediate impact on Wall Street has been fairly muted as all three major indexes closed around record highs on Thursday.
The Dow and S&P 500 are set for their best week in nearly a year, while the Nasdaq is on track for its best in two months.
Dow E-minis were down 17 points, or 0.04%, S&P 500 E-minis were down 10.5 points, or 0.17% and Nasdaq 100 E-minis were down 83.75 points, or 0.39%.
Shares of chipmaker Nvidia (NASDAQ: NVDA) eased 1% in premarket trading after the AI pioneer became the first in history to surpass a $3.6 trillion in market value on Thursday.
Airbnb (NASDAQ: ABNB) dropped 5.3% after missing third-quarter profit estimates, while Pinterest (NYSE: PINS) slumped 12.2% after a disappointing revenue forecast.
U.S.-listings of Chinese companies lost ground after investors were left unimpressed by the government’s latest fiscal support measures. JD.com (NASDAQ: JD) dropped 4.2% and Alibaba (NYSE: BABA) fell 3.8%.
Investors were also keeping an eye on a likely “Red Sweep” as Republicans were set to keep their narrow lead in the House of Representatives after winning control of the Senate. That would make it easier for Trump to enact his legislative plans.
The University of Michigan’s preliminary consumer sentiment survey data for November is due later in the day, while Federal Reserve Board Governor Michelle Bowman is expected to speak.
(Source: Reuters)
