S&P 500 futures rise following retail sales increase, benchmark nears record before Fed decision: Live updates

S&P 500 futures climbed higher Tuesday following better-than-expected retail sales data ahead of the start of the Federal Reserve’s September policy meeting.

Futures tied to the broad market index added 0.4%, while Nasdaq-100 futures gained 0.6%. Dow Jones Industrial Average advanced 105 points, or 0.3%. The S&P 500 sits just 0.65% from a new record heading into Tuesday’s session.

Microsoft rose 2% after the tech giant hiked its quarterly dividend by 10.7% to 83 cents per share. The company also approved a $60 billion buyback program.

Intel shares popped about 7% in premarket trading after the company said it plans to make its foundry business a subsidiary. The Biden administration also awarded the company up to $3 billion in funding through the Chips Act.

The latest retail sales data indicated solid consumer health ahead of the Federal Reserve’s policy meeting set to begin on Tuesday. Retail sales rose 0.1% in August versus economists’ estimates for a 0.2% decline, according to Dow Jones. Excluding autos, the number also came in at a 0.1% increase, which slightly missed the 0.2% consensus forecast.

Wall Street is on standby for the Fed’s long-anticipated rate cut, a move that could help boost earnings growth for companies following a backdrop of steep borrowing costs and high inflation. The Fed first embarked on its aggressive hiking campaign in March 2022.

While investors expect a cut Wednesday, the market is divided on the size of the potential reduction. Traders are currently pricing in a 67% chance that the central bank eases rates by 50 basis points, according to CME Group’s Fed Watch tool. That’s up from a roughly 47% chance Friday.

“The decision is complicated by conflicting signals of solid economic activity but a weakening labor market,” said Principal Asset Management’s Seema Shah. “Rarely have market expectations been so torn, so close to a [Federal Open Market Committee] meeting.”

While a 50 basis point cut isn’t out of the question, the chief global strategist thinks that the Fed should take a more cautious approach to cutting and ease rates by 25 basis points. She is forecasting additional 25 basis point cuts in November and December. One basis point equals 0.01%.

Wall Street is coming off a mixed trading session. The 30-stock Dow rose more than 228 points, or 0.55%, to close at a record high, while the S&P 500 added 0.13%. The Nasdaq Composite lost 0.52% as Apple and prominent chip stocks declined. The moves come after the market recorded its best trading week of 2024 in the prior week as stocks climbed higher in anticipation of forthcoming rate cuts.