Dec 10 (Reuters) – U.S. stock index futures fell on Wednesday, ahead of a Federal Reserve monetary policy decision widely expected to deliver an interest rate cut alongside hawkish commentary on the path of future easing.
The central bank’s ongoing meeting is likely one of its most divisive in years, as policymakers seek a delicate balance between reducing borrowing costs to support the labor market and curbing any reacceleration of inflation.
A prolonged absence of fresh economic data following the recent government shutdown, combined with uncertainty over who will lead the Federal Reserve next year, is adding to policymakers’ challenges.
White House economic adviser Kevin Hassett, an advocate for interest rate cuts, is a front-runner for the position.
Traders are pricing in an 89.9% chance that the Federal Reserve will cut interest rates by 25 basis-points at 2 p.m. ET, according to CME’s FedWatch Tool, and are also betting on additional easing in 2026.
“The big focus will be the Summary of Economic Projections, the number of dissenters against the 25-basis-point cut, and then Chair Powell’s press conference,” said Chris Turner, global head of markets at ING.
A second interest rate cut priced for 2026 is under threat, amid a hawkish reassessment of global central bank policy by investors this week, he added.
Inflation worries have prompted market participants to price in higher interest rates by the end of 2026 in Australia, Canada and Japan.
Also in focus will be the Fed’s balance sheet and plans to purchase short-term bills to ensure ample liquidity in the banking system.
At 5:33 a.m. ET, Dow E-minis were down 80 points, or 0.17%, S&P 500 E-minis were down 10 points, or 0.15% and Nasdaq 100 E-minis were down 59 points, or 0.23%.
U.S. stocks have rallied since late November on lower rate expectations, bringing the benchmark S&P 500 within 1% of a record high. The Russell 2000 index, tracking small caps also hit a record high, outperforming broader Wall Street this quarter.
The rest of the week is likely to be dominated by earnings reports from major artificial intelligence players, including software company Oracle and chipmaker Broadcom, due after markets close.
Oracle and Broadcom were marginally higher in premarket trading.
On Wednesday, data center power company GE Vernova
Lending giant JPMorgan Chase steadied following a nearly 5% drop in the previous session after saying it expects higher expenses next year.
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(Reporting by Johann M Cherian in Bengaluru; Editing by Tasim Zahid)
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