SPX

US STOCKS-Futures climb as rate-cut cheer persists

Credit: REUTERS/BRENDAN MCDERMID

By Shristi Achar A and Johann M Cherian

Dec 15 (Reuters) - Futures tracking U.S. stock indexes gained on Friday as investors remained upbeat in a week marked by economic data signaling a soft landing for the economy and the Federal Reserve's hints of lower interest rates next year.

The Fed left interest rates unchanged on Wednesday, acknowledging slowing inflation and indicated lower borrowing costs were on the horizon, causing the Dow Jones Industrial Average .DJI to notch its second straight record high close on Thursday.

Money markets see a 79% chance of at least a 25-basis point rate cut as soon as March 2024, up from about 50% before Wednesday's policy announcement, while almost fully pricing in another cut in May 2024, according to CME Group's FedWatch tool.

"Because we are seeing clear disinflation taking place, the market is starting to think about cutting cycles in the same way it was thinking about the hiking cycle," said Sphia Salim, head of European rates research at BofA Global Research.

"We are far from neutral and inflation is moving fast, so maybe central banks are behind the curve and ultimately may need to converge back to neutral quite rapidly."

The dovish turn of events caused equities to rally recently, with the benchmark S&P 500 .SPX and the tech-heavy Nasdaq .IXIC eyeing six straight weeks of gains.

U.S. Treasury yields fell below 4% to multi-month lows, with yield on the benchmark 10-year Treasury note US10YT=RR last standing at 3.9166%. US/

Markets will now parse the S&P Global Composite Flash PMI data for December, due after the opening bell.

At 7:01 a.m. ET, Dow e-minis 1YMcv1 were up 124 points, or 0.33%, S&P 500 e-minis EScv1 were up 11.75 points, or 0.25%, and Nasdaq 100 e-minis NQcv1 were up 50.75 points, or 0.30%.

Among stocks, AlteryxAYX.N added 1.4% before the bell as Piper Sandler upgraded the analytics automation firm's shares to "neutral" from "underweight".

Costco WholesaleCOST.O rose 1.7% after the retailer topped Wall Street estimates for first-quarter results due to demand for cheaper groceries.

Chip stocks including Intel INTC.O, Micron Technology MU.O and Advanced Micro Devices AMD.O added between 0.9% and 1.7%.

First Solar FSLR.O and Enphase Energy ENPH.O added 2.4% and 3.3%, respectively, as Jefferies started coverage of the solar companies with a "buy" rating.

(Reporting by Shristi Achar A and Johann M Cherian in Bengaluru; Additional reporting by Shashwat Chauhan; Editing by Shounak Dasgupta)

((Shristi.AcharA@thomsonreuters.com; https://twitter.com/ShristiAchar))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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