US Stock Futures Rise On First Fed Cut This Year: Markets Wrap

US equity-index futures gained, suggesting investors are regaining confidence after the Federal Reserve’s decision to lower borrowing costs, even as questions linger over the path of future policy moves.

Contracts for the S&P 500 and the Nasdaq 100 advanced around 0.4% in early trading Thursday, after the underlying benchmarks posted minor declines following the central bank’s announcement. Contracts for Asian stocks were mixed. Treasuries fell across the curve, sending the policy-sensitive two-year yield five basis points higher, while an index of the dollar strengthened.

Stocks climbed to record highs this week as investors priced in a 25-basis-point cut ahead of Wednesday’s meeting. While the Fed followed through, officials stressed policy will be decided “meeting by meeting” and warned “there’s no risk-free path” ahead. Even so, policymakers now see two additional quarter-point cuts this year, which is one more than what was projected in June.

“It’s going to be very much business as usual,” said Andrew Jackson, head of Japan equity strategy at Ortus Advisors. The market will continue “to chase upside in tech and AI with very little profit taking emerging from the Fed event, despite most indices at or close to their record highs.”

The Fed lowered the benchmark interest rate by a quarter percentage point and penciled in two more reductions this year following months of intense pressure from the White House to slash borrowing costs. The Federal Open Market Committee voted 11-1 to cut the target range for the federal funds rate to 4%-4.25%.

Chair Jerome Powell pointed to growing signs of weakness in the labor market to explain why officials decided it was time to cut rates after holding them steady since December amid concerns over tariff-driven inflation.

“Powell’s tone and words in his press conference do indicate this was more a defensive move to avoid more weakness in the labor market,” said Steve Wyett at BOK Financial. The muted market response in the US was a sign the cut “was widely expected,” he said.

Fed policymakers now foresee one quarter-point cut in 2026 and one in 2027. They also slightly upgraded their outlook for both growth and inflation in 2026.

The decline in Treasuries on Wednesday signaled disappointment among bond traders who had bet on a more aggressive series of Fed cuts. 

“The dot plot now implies two more cuts this year, but Powell downplayed its significance,” given the risk of further jobs weakness, said Dan Siluk at Janus Henderson Investors. “The messaging remains nuanced and far from a full pivot,” he said.

In Asia, China’s cyberspace regulator instructed companies including Alibaba Group Holding Ltd. to halt orders for a Nvidia Corp. semiconductor that can be used for AI applications.

New Zealand’s currency and sovereign bond yields slipped after second quarter GDP data missed all estimates, increasing chance of further rate cuts before year-end.

Oil prices fell Wednesday after a three-session advance as traders assessed fresh US stockpile data and the Fed’s rate cut. Gold was steady after a Wednesday drop.

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.4% as of 8:52 a.m. Tokyo time

• Hang Seng futures fell 0.3%

• S&P/ASX 200 futures were little changed

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro rose 0.1% to $1.1826

• The Japanese yen was little changed at 146.88 per dollar

• The offshore yuan was little changed at 7.1017 per dollar

• The Australian dollar was little changed at $0.6656

Cryptocurrencies

• Bitcoin rose 0.8% to $116,551.7

• Ether rose 2.1% to $4,597.25

Bonds

• Australia’s 10-year yield advanced three basis points to 4.25%

Commodities

• West Texas Intermediate crude rose 0.1% to $64.12 a barrel

• Spot gold rose 0.3% to $3,669.77 an ounce

This story was produced with the assistance of Bloomberg Automation.