US stock futures tread water as Fed’s Kashkari tempers rate cut cheer

investing.com:

Investing.com-- U.S. stock index futures moved little in evening deals on Wednesday, steadying after a positive session on Wall Street as uncertainty persisted over the scope and scale of the Federal Reserve’s interest rate cuts.

While Fed Chair Jerome Powell said that the bank will cut interest rates eventually in 2024, he noted that the Fed still needed more confidence that inflation was decreasing. This notion was furthered by separate comments from Minneapolis Fed President Neel Kashkari, who said that he did not expect the Fed to cut rates more than twice this year.

Wall Street indexes had risen on Wednesday after Powell’s comments spurred some optimism over rate cuts this year. But futures carried over little of the positive momentum, and largely trimmed early gains after Kashkari’s comments.

S&P 500 Futures steadied at 5114.25 points, while Nasdaq 100 Futures fell slightly to 18,034.0 points by 18:19 ET (23:19 GMT). Dow Jones Futures were flat at 38,697.00 points. 

Speaking in an interview on WSJ Live, Kashkari said that he doesn’t expect more than two rate cuts in 2024, or even possibly one cut. 

He cited recent resilience in the U.S. economy, which could underpin U.S. inflation expectations and afford the Fed more headroom to keep rates higher. 

Kashkari’s comments echo those made by other Fed members over the past two weeks, who said that sticky inflation may undermine expectations of early rate cuts. 

Higher for longer rates tend to weigh on the economy and diminish corporate earnings, while also denting the appeal of risk-driven assets such as equities. 

Nonfarm payrolls data due Friday is expected to offer more cues on the U.S. economy. 

Wednesday’s gains put Wall Street indexes back in sight of record