US pre-open: Futures higher as focus remains on Federal Reserve

Wall Street futures had major indices recording early gains ahead of the bell on Monday as the final full trading week for the year gets set to begin.

As of 1320 GMT, Dow Jones futures were up 0.20%, while S&P 500 and Nasdaq-100 futures had the indices opening 0.21% and 0.06% firmer, respectively.

The Dow closed 56.81 points higher on Friday as market participants turned their attention to the US central bank.

Investor sentiment turned positive late last week after Federal Reserve chairman Jerome Powell seemingly indicated that three short-term interest rate cuts were expected to take place in 2024 amid cooling inflation.

On Friday, however, New York Fed president John Williams and Atlanta Fed head Raphael Bostic both pushed back on growing expectations for rate cuts. Williams said it was too early for policymakers to begin thinking about lowering borrowing costs as they consider whether policy was restrictive enough to get inflation back to its 2% target, while Bostic stated he foresees two rate cuts in 2024, starting from the third quarter.

Scope Markets' Joshua Mahony said: "A changeable outlook from the Federal Reserve has markets in a spin this morning, with the post-FOMC boost starts to fade. A surprisingly dovish outlook from Fed chair Powell seemingly set off the starting pistol for a year-end 'Santa rally'

"However, Friday's comments from Fed member Williams have brought markets back down to earth, warning that the Fed were in fact yet to even discuss rate cuts. With markets currently pricing the first of six 2024 rate cuts in March, we are seeing market confidence weaken as traders await greater clarity to clear up the current confusion."

On the macro front, the National Association of Housebuilders' December housing market index will be published at 1500 GMT.

No major corporate earnings were slated for release on Monday.

Reporting by Iain Gilbert at Sharecast.com