US stock futures experienced a pause on Friday following a significant sell-off on Wall Street, marking the sharpest decline in over a month. Investor sentiment appeared to shift, particularly in the technology sector, as confidence waned regarding a potential interest rate cut by the Federal Reserve in December.
Futures for the Dow Jones Industrial Average and the S&P 500 hovered just beneath the flat line, while the tech-heavy Nasdaq 100 saw a minor decline of 0.1%. This tentative rebound comes on the heels of a particularly tough trading session for US equities, during which all major indexes registered their steepest one-day losses in over a month. Notably, the Dow erased record gains that had pushed it above the significant 48,000 mark for the first time ever, while the Nasdaq Composite was notably affected, with major players such as Nvidia, Broadcom, and Tesla experiencing significant drops.
Amid these developments, uncertainty surrounding the Federal Reserve’s upcoming policy decisions has begun to take a toll on market sentiment. The previous buoyant mood following the end of a six-week government shutdown has given way to renewed questions about the state of the US economy. Traders are currently estimating a roughly 52% chance of a quarter-point rate cut in December, a sharp decline from nearly 63% just a day prior and a staggering drop from over 95% observed a month earlier.
Recent comments from several Federal Reserve officials have contributed to a more cautious outlook. Notably, Minneapolis Federal Reserve President Neel Kashkari pointed to the persistence of economic resilience in recent data, suggesting that maintaining the current rate could be the most prudent choice moving forward. However, he also acknowledged that he could support either approach.
The market is left grappling with questions regarding upcoming economic data releases now that the government is operational again. Despite expectations for the restart of vital data reporting, the White House has indicated that all forthcoming economic data will be “permanently impaired,” adding to the uncertainty.
Meanwhile, in a related development, gold prices have seen an uptick after experiencing declines over the past month. This increase is attributed to the ongoing instability resulting from the government shutdown, which has led many investors to seek refuge in this traditional safe-haven asset. Reports indicate a growing demand for gold as concerns over the economic outlook intensify.
