US stock index futures edged lower on Wednesday evening as investors grappled with the prospect of slower interest rate cuts in 2025 while also speculating over increased trade tariffs under President-elect Donald Trump. Futures fell after a muted session on Wall Street, as the minutes of the Fed’s December meeting struck a hawkish chord, while also raising some concerns over the impact of Trump’s planned tariffs. CNN reported on Wednesday that Trump was considering declaring a national economic emergency to provide legal justification for a series of universal trade tariffs, as well as duties on China.
The S&P 500 futures fell 0.1% to 5,955.75 points, while the Dow Jones Industrial Average futures fell 0.1% to 21,338.50 points by 18:16 ET. Nasdaq 100 futures steadied at 42,878.0 points. U.S. markets will be closed on Thursday for a national day of mourning to honor the death of former President Jimmy Carter.
Minutes from the December meeting showed that Fed policymakers were increasingly leaning towards a slower pace of interest rate cuts this year, amid persistent concerns over stalling disinflation. The minutes reiterated the central bank’s hawkish stance, effectively halving the number of rate cuts projected for 2025 to two from four. The central bank cut interest rates by a total of 1% in 2024, but is now expected to cut rates only marginally in 2025, amid signs of sticky inflation and a robust labor market.
Fed’s hawkish stance impacts futures
Wednesday’s minutes also showed some Fed officials were concerned that protectionist policies under Trump will keep inflation underpinned, while also stymieing economic growth. Officials warned that the inflation fight could take longer than expected due to “the effects of potential changes in trade and immigration policy.”
Trump, who will take office on January 20, has vowed to impose steep import tariffs on several U.S. trading partners, especially China.
These tariffs are expected to increase the cost of imports for American buyers, heralding a potential uptick in inflation. Key economic data due on Friday is also set to factor into the Fed’s outlook on rates. Wall Street indexes moved in a tight range on Wednesday after marking a weak start to 2025.
The S&P 500 rose 0.1% to 5,917.30 points on Wednesday, while the Dow Jones Industrial Average fell 0.1% to 19,475.93 points. The Nasdaq Composite rose 0.3% to 42,635.20 points. Weakness in technology stocks was a key point of pressure on Wall Street, especially as investors locked in profits from a stellar 2024.
Focus is now on the fourth-quarter earnings season, which is set to begin in earnest next week with reports from several major banks.
