Stock futures had a mixed start to the short-term trading week as investors weighed the path to next year's interest rates after the Federal Reserve signaled they would remain high for an extended period of time.
Futures prices for the S&P 500 Index (ES=F) fell 0.2%, while futures prices for the tech-heavy Nasdaq Index (NQ=F) remained flat. Dow Jones Industrial Average futures (YM=F) fell 0.5%.
Wall Street is coming off a strong Friday, but it's been a weak and volatile week this week, with all three major averages up more than 1% on Friday, but up about 1% for the week. It's down 2%. Wednesday will be one of the worst days for stocks this year as the Fed plays the role of the Grinch and signals it will back off on the pace of rate cuts next year.
But on Friday, the Federal Reserve's preferred measure of inflation, the Personal Consumption Expenditure Index, showed further cooling on the inflation front, although there is still some resilience. Still, the only opposition to the Fed's move to cut interest rates last week she said she voted against The reason for the rate cut is that “there is still work to be done on inflation.”
Investors are currently betting on the Fed keeping interest rates on hold next month, according to the CME FedWatch tool. At the subsequent meeting in March, the stakes will be about 50-50 on whether to cut or keep rates unchanged.
But this week's lighter schedule will provide Wall Street with a bit of a breather, an opportunity to digest and reflect on what's ahead in 2025. The market will close at 1pm ET on Tuesday, followed by a Christmas break on Wednesday.
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