(Reuters) – U.S. stock futures fell on Friday, pausing after the previous session's rally that put Wall Street's main indexes on track for weekly gains after the Federal Reserve took a pivotal stance on monetary policy earlier in the week.
The S&P 500 posted its eighth session of nine gains on Thursday and closed at a record high, surpassing the milestone it set in mid-July. The Dow Jones closed above the psychological level of 42,000 points and hit a record high.
The indexes, along with the tech-heavy Nasdaq, are on track to post weekly gains of more than 1%. The S&P 500 is also up more than 1% so far this month, bucking the historical trend that showed September has been weaker for U.S. stocks on average.
At 5:43 a.m. ET, the Dow E-minis were down 12 points, or 0.03%, the S&P 500 E-minis were down 14 points, or 0.24%, and the Nasdaq 100 E-minis were down 75 points, or 0.37%.
Risk appetite received a boost earlier this week after the Federal Reserve kicked off its easing cycle with a large but expected 50 basis point cut and gave assurances that more cuts were on the way. The central bank also projected a period of sustained economic growth and low unemployment and inflation.
With economic data in short supply, investors will be focused on remarks from Philadelphia Federal Reserve President Patrick Harker later in the day for his thoughts on the central bank's outlook on politics and the economy.
Traders estimate there is a 59.1% chance the Fed will maintain a 25 basis point cut in November, according to CME Group's FedWatch tool. Expectations are for rates to fall 72 basis points by year-end, according to LSEG data.
Investors will also be bracing for volatility due to the “triple witching,” an event in which options and futures linked to stock indices, futures and individual stocks will expire on the third Friday of the last month of the quarter.
Among the biggest gainers, FedEx fell 13% after the postal services company, often seen as a bellwether for the U.S. economy, reported a sharp drop in quarterly profit and cut its full-year revenue outlook. Rival United Parcel Service fell 2.4%.
Nike rose 6.9% after the sportswear giant said former top executive Elliott Hill will rejoin the company to succeed John Donahoe as president and chief executive.
A rebalancing of the major indices is also expected. Dell fell 0.7% and Palantir Technologies fell 2.4%, with their shares expected to join the S&P 500 before the market opens on September 23.
Globally, investors were left wondering whether the world's largest economy will boom or face a recession. Central banks in the United Kingdom and Japan took a more cautious stance on interest rates, days after the Federal Reserve's verdict.
Historically, stocks have performed well in a rate-cutting cycle, as lower borrowing costs could ease pressures on corporate earnings. However, the outlook looks bleak, as S&P 500 valuations are well above their long-term average.
(Reporting by Johann M. Cherian in Bengaluru; editing by Maju Samuel)
