Stock futures up ahead of Fed’s final meeting of 2023

Futures tied to the Dow Jones Industrial Average gained 22 points, or 0.06 per cent and S&P futures and Nasdaq 100 futures both added less than 0.1 per cent

U.S. stock futures were marginally higher on Sunday night as investors await this week’s final Fed meeting of 2023 for any hints on when central bankers will begin to cut interest rates.

Futures tied to the Dow Jones Industrial Average gained 22 points, or 0.06 per cent. S&P futures and Nasdaq 100 futures both added less than 0.1 per cent.

This year’s surge in equities is widely expected to continue, with investors becoming growingly optimistic about further gains after noticing recent diversification within the rally. Gains from the Magnificent 7 group of tech stocks have declined in comparison to this year’s laggards, such as health care and small-cap firms.

The S&P 500 and the tech-heavy Nasdaq Composite both ended Friday with a six-week winning streak, gaining 0.2 per cent and 0.7 per cent, respectively. The Dow, meanwhile, was flat for the week.

Sentiment has also been boosted by the central bank’s efforts to lower inflation, which have been more successful than many Fed officials and investors had expected. Consumer concerns over inflation plunged in December while consumer optimism climbed, according to the latest University of Michigan consumer sentiment survey released on Friday.

During the Fed’s policy meeting on Wednesday, Chair Jerome Powell is expected to maintain the key fed funds rate steady in the 5.25 per cent-5.5 per cent range, where it has been since July. Powell is also expected to reiterate his commitment to lowering inflation in his press conference on Wednesday. Already, the CME Group’s FedWatch tool is suggesting that markets are pricing in a 45 per cent chance in March that the Fed will reduce rates by 0.25 percentage points.