Investors Await Fed's Interest Rate Decision Amid Market Uncertainty

U.S. stock index futures remained largely flat as investors anticipated a possible interest rate cut by the Federal Reserve. While there is a higher probability of a 50-basis-point reduction, analysts warn that such a move could unsettle the market. Futures on major stock indices varied slightly in premarket trading.

On Wednesday, U.S. stock index futures showed little movement as investors anxiously awaited the Federal Reserve's potential interest rate cut—the first in over four years. A majority of traders are betting on a half-percentage-point reduction.

Since July 2023, borrowing costs have been at their highest levels in over 20 years, following the central bank's interest rate hike to between 5.25% and 5.50%. As of 04:44 a.m. ET, Dow E-minis rose 44 points (0.11%), while S&P 500 E-minis increased by 0.5 points (0.01%) and Nasdaq 100 E-minis decreased by 2.5 points (0.01%). Futures linked to the Russell 2000 index, which tracks small caps, were also flat.

The S&P 500 and Dow achieved intraday record highs the previous session, buoyed by positive economic data suggesting a strong economy ahead of the Fed's 2:00 p.m. ET decision. However, uncertainties remain regarding the rate cut's magnitude. Despite a 63% chance of a 50-basis-point cut, analysts caution that an aggressive move could unsettle already nervous markets. Investors still expect further Federal Reserve commentary from Chair Jerome Powell later in the day.

(With inputs from agencies.)