Investors Await Fed Decision: Uncertainty Weighs on US Stocks

The US stock index futures were generally flat to slightly lower ahead of the release of a series of economic data on Thursday. Investors searched for clues regarding the expected interest rate cut by the Federal Reserve, which is anticipated later this month. The S&P 500 and the tech-focused Nasdaq closed lower for the second consecutive day on Wednesday, after a drop in job openings in July and a Fed survey sparked concerns about a slowdown in economic activity. According to CME Group's FedWatch tool, traders' bets on a 25-basis-point rate cut at the Fed's next meeting in September stand at 59%. Meanwhile, bets on a larger 50-basis-point cut increased to 41% from 34% the previous week. Historically, September has been a weak month for US stocks: since 1928, the benchmark index has fallen by an average of about 1.2%. Concerns over a cooling labor market and a possible recession have led to increased caution, with the S&P 500 down more than 2% and tech stocks down nearly 5% this week. Late on Wednesday, San Francisco Fed President Mary Daly, a voting member this year, stated that the central bank needs to cut rates to keep the labor market healthy. However, the exact extent of the cut would depend on upcoming economic data. Attention will be focused on the ADP National Employment Report and weekly jobless claims before the crucial non-farm payroll data from the Labor Department is released on Friday. Economists expect the ADP report to show an increase in private payrolls by 145,000 jobs in August, compared to a gain of 122,000 in July. The Institute of Supply Management's survey, to be released at 10 a.m. ET, is expected to show services sector activity at 51.1 in August. As of 5:32 a.m. ET, Dow E-minis were up by 24 points or 0.06%, S&P 500 E-minis were down by 1 point or 0.02%, and Nasdaq 100 E-minis fell 39 points or 0.21%. Nvidia rose slightly in pre-market trading after the AI chip firm had fallen more than 11% in the past two sessions. Tesla gained 2.3% after announcing plans to launch the advanced driver assistance system for self-driving cars in Europe and China in the first quarter of next year, subject to regulatory approval. Other interest-sensitive growth stocks like Meta, Alphabet, and Apple remained largely stable to slightly lower. Shares of C3.ai plummeted 18.8% after the company missed its revenue expectations for software subscriptions, as companies kept their spending cautious amid economic uncertainties. Ahead of the US presidential elections, analysts from Goldman Sachs indicated that the proposed corporate tax hike by Democratic presidential candidate Kamala Harris could reduce S&P 500 company earnings by about 5%, while Donald Trump's proposed relief measures could boost earnings by around 4%.