Stock Index Futures Tread Water With All Eyes on Fed Rate Decision

September S&P 500 E-Mini futures (ESU25) are up +0.01%, and September Nasdaq 100 E-Mini futures (NQU25) are down -0.04% this morning as investors refrain from making any big bets ahead of a highly anticipated Federal Reserve interest rate decision.

Stock index futures’ subdued tone reflects investor caution over how the Fed will signal the interest-rate path, with a quarter-point cut at this meeting and three more by April already priced in.

In yesterday’s trading session, Wall Street’s major indexes ended slightly lower. Warner Bros. Discovery (WBD) slumped over -6% and was the top percentage loser on the S&P 500 and Nasdaq 100 after TD Cowen downgraded the stock to Hold from Buy. Also, Rocket Lab (RKLB) tumbled more than -12% after the rocket launch company announced a $750 million at-the-market equity offering. In addition, Dave & Buster’s Entertainment (PLAY) plunged over -16% after the arcade-restaurant operator posted downbeat Q2 results. On the bullish side, chip stocks gained ground, with ON Semiconductor (ON) rising more than +3% to lead gainers in the Nasdaq 100 and Marvell Technology (MRVL) advancing over +2%.

Economic data released on Tuesday showed that U.S. retail sales climbed +0.6% m/m in August, stronger than expectations of +0.2% m/m, and core retail sales, which exclude motor vehicles and parts, grew +0.7% m/m, stronger than expectations of +0.4% m/m. Also, U.S. August industrial production unexpectedly rose +0.1% m/m, stronger than expectations of -0.1% m/m, and manufacturing production unexpectedly rose +0.2% m/m, stronger than expectations of -0.2% m/m. In addition, the U.S. import price index unexpectedly rose +0.3% m/m in August, stronger than expectations of -0.2% m/m.

“The American consumer appears to be in good spirits. That’s good news for the economy, but it may heighten debate over how aggressively the Fed needs to cut rates,” said Ellen Zentner at Morgan Stanley Wealth Management.

Today, all eyes are focused on the Federal Reserve’s monetary policy decision. The Federal Open Market Committee is widely expected to cut the Fed funds rate by 25 basis points to a range of 4.00% to 4.25%. Market watchers will follow Chair Jerome Powell’s post-policy meeting press conference for any indications on how quickly rates may fall from here. Following recent data painting a picture of a slowing labor market, U.S. money markets have almost fully priced in follow-up rate cuts in October and December. Market participants will also closely parse the Fed’s quarterly “dot plot” in its Summary of Economic Projections, which will offer key guidance on how policymakers expect the interest-rate path to unfold over the next few years.

The equity options market is predicting about a 0.7% move after the Fed meeting, matching the second-lowest expected swing in the past 18 months, according to data from Susquehanna International Group.

A survey conducted by 22V Research revealed that 43% of respondents are leaning “risk-on” in reaction to the Fed meeting, 31% said “mixed/negligible,” and 26% said “risk-off.”

On the economic data front, investors will focus on U.S. Building Permits (preliminary) and Housing Starts data, set to be released in a couple of hours. Economists expect August Building Permits to be 1.370 million and Housing Starts to be 1.370 million, compared to the prior figures of 1.362 million and 1.428 million, respectively.

U.S. Crude Oil Inventories data will be released today as well. Economists expect this figure to be 1.400 million, compared to last week’s value of 3.939 million.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.014%, down -0.25%.

The Euro Stoxx 50 Index is up +0.20% this morning, recouping some of the previous session’s losses, while investors await the Fed’s monetary policy decision. Gains in technology stocks are leading the overall market higher on Wednesday. Final data from Eurostat released on Wednesday showed that the Eurozone’s annual inflation rate held at 2.0% in August, unchanged from July and slightly below the preliminary estimate of 2.1%. The European Central Bank’s wage tracker showed that wage growth in the Eurozone is set to slow further in the coming months, likely keeping inflation contained. Meanwhile, data from the Office for National Statistics showed that the U.K. annual inflation rate remained elevated in August. The data came a day before the Bank of England’s monetary policy decision, where it is widely expected to leave its key rate unchanged at 4.00%. In other news, UBS raised its year-end target for Europe’s STOXX 600 index to 600 points from 550 and its 2026 target to 650 from 590, citing expectations that earnings downgrades could slow and surveys indicate an improvement in new orders. In corporate news, Novo Nordisk A/S (NOVOB.C.DX) rose over +1% after Berenberg upgraded the stock to Buy from Hold.

U.K. CPI, U.K. Core CPI, Eurozone’s CPI, and Eurozone’s Core CPI data were released today.

U.K. August CPI rose +0.3% m/m and +3.8% y/y, in line with expectations.

U.K. August Core CPI rose +3.6% y/y, weaker than expectations of +3.7% y/y.

Eurozone’s August CPI rose +0.1% m/m and +2.0% y/y, weaker than expectations of +0.2% m/m and +2.1% y/y.

Eurozone’s August Core CPI rose +0.3% m/m and +2.3% y/y, in line with expectations.

Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed up +0.37%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.25%.

China’s Shanghai Composite Index closed higher today, led by gains in the tech sector. Technology stocks surged on Wednesday amid renewed bets on artificial intelligence. The latest boost to optimism came from a state television report Tuesday night that China Unicom’s Sanjiangyuan data center signed contracts to deploy AI chips from domestic firms, including Alibaba’s chip unit T-Head. Also supporting sentiment are positive signals in the bilateral relationship between the world’s two largest economies. U.S. President Donald Trump said this week he will speak with Chinese leader Xi Jinping on Friday, and U.S. and Chinese officials reached a framework deal to keep the TikTok app operating in the U.S. Meanwhile, China on Tuesday announced measures to boost services consumption, pledging to further open sectors such as internet and culture and to promote the hosting of international sports events, in an effort to bolster its slowing economy. In corporate news, Baidu surged over +15% in Hong Kong after Arete Research upgraded the stock to Buy from Sell, while Goldman Sachs analysts highlighted that the company’s AI model showed potential to surpass DeepSeek. Also, SMIC rose nearly +7% after a report said the company is conducting trials on China’s first domestically produced advanced chipmaking equipment. In addition, Alibaba climbed more than +5% in Hong Kong after Goldman Sachs raised its price target on the stock and increased its valuation estimate for the company’s cloud business, citing the latest AI models.

Japan’s Nikkei 225 Stock Index closed lower today, pulling back from a record high as investors digested weak trade data from the country and cautiously awaited the Fed’s rate decision. Insurance and utility stocks led the declines on Wednesday. Limiting losses, chip stocks advanced, mirroring overnight strength in their U.S. peers. Government data released on Wednesday showed that Japan’s exports declined for the fourth straight month in August as higher U.S. tariffs weighed on outbound trade. Exports to the U.S. tumbled 13.8% in August from a year earlier, the biggest drop since February 2021, driven by weakness in autos and chip-making equipment, compared with a 10.1% decline in July. Japan reached a trade agreement with the U.S. in July that eased some of the uncertainty surrounding the trade outlook. However, economists anticipate that exports will remain under pressure as domestic firms continue to face higher duties compared to the pre-Trump era. Meanwhile, Japanese government bonds edged higher on Wednesday after a 20-year government bond auction attracted the strongest demand since 2020. Investor attention is also on the Bank of Japan’s policy decision on Friday, where the central bank is expected to keep its short-term policy rate unchanged at 0.5%. Economists are divided on when the BOJ will move to raise rates next, as domestic political uncertainty and trade headwinds complicate the outlook. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +0.17% to 24.17.

The Japanese August Trade Balance stood at -242.5 billion yen, stronger than expectations of -513.6 billion yen.

The Japanese August Exports fell -0.1% y/y, stronger than expectations of -1.9% y/y.

The Japanese August Imports fell -5.2% y/y, weaker than expectations of -4.2% y/y.

Pre-Market U.S. Stock Movers

Workday (WDAY) climbed over +5% in pre-market trading after activist investor Elliott Investment Management disclosed a $2 billion stake in the company.

Nvidia (NVDA) fell more than -1% in pre-market trading after the Financial Times reported that China’s internet watchdog had banned the country’s biggest technology firms from buying Nvidia’s AI chips.

Netflix (NFLX) rose over +1% in pre-market trading after Loop Capital upgraded the stock to Buy from Hold with a price target of $1,350.

Vistra Corp. (VST) gained more than +1% in pre-market trading after Daiwa upgraded the stock to Buy from Hold with a $250 price target.

New Fortress Energy (NFE) jumped over +42% in pre-market trading after announcing a long-term agreement to supply liquefied natural gas to Puerto Rico.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Wednesday - September 17th

General Mills (GIS), Manchester United (MANU), Cracker Barrel Old (CBRL), WhiteFiber (WYFI), Nano Dimension (NNDM), Sangoma Technologies (SANG), Innate Pharma (IPHA).