Futures slip as peak rate optimism wanes; Cisco drops
By Shristi Achar A and Amruta Khandekar
(Reuters) -U.S. stock index futures slipped on Thursday as optimism around an end to the Federal Reserve's interest rate hikes waned and a drop in shares of Cisco following a dour forecast further weighed on sentiment.
Wall Street's main indexes have rallied this week as evidence of cooling inflation in the world's largest economy fueled hopes the Fed was most likely done hiking interest rates.
In an action-packed week, which saw the tech-heavy Nasdaq hit an over three-month high, markets also took comfort from the U.S. Senate's passage of a stopgap spending bill to avert a government shutdown.
However, uncertainty around when the central bank might start cutting interest rates has kept investors on edge.
«Investors threw the Fed’s 'higher for longer' mantra out of the window this week,» said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
«But this is certainly as good as it gets in terms of Fed optimism. If the markets go faster than the music, the Fed must calm down the game by a tough talk, and if needed, by more action.»
Pressuring futures further, Cisco Systems (NASDAQ:CSCO) shed 11% before the bell, as the communications and networking firm cut its full-year revenue and profit forecasts on slowing demand for its networking equipment.
Walmart (NYSE:WMT) raised its annual sales and profit forecast on Thursday for the second straight quarter, signaling a strong start to the holiday season. Still, shares of the retail giant slipped 2.9%.
While money markets have fully priced in a probability that the Fed will hold rates steady in the December meeting, they see about 62% odds of an at least 25 basis point rate cut in May, according to CME Group's (NASDAQ:CME) FedWatch tool.
Read more on investing.com
