US Stock Futures Slip as Fed’s Rate Cut Rally Cools; FedEx Takes a Hit

U.S. stock index futures dipped slightly in late trading Thursday, following a significant interest rate cut by the Federal Reserve that initially fueled a surge in tech stocks, driving Wall Street to fresh record highs.

FedEx Corporation’s disappointing earnings weighed heavily on investor sentiment, as the company’s stock plummeted during after-hours trading.

Thursday’s rally was driven by an initial mixed reaction to the Fed’s rate cut. Chair Jerome Powell’s less dovish outlook on future rate cuts tempered enthusiasm. However, with sharp near-term rate reductions still anticipated, investors flocked to riskier assets, with tech stocks enjoying the bulk of the attention.

Despite the earlier surge, futures indicated cooling sentiment. Caution was growing ahead of a key Bank of Japan meeting on Friday. By the evening, S&P 500 futures dropped 0.1% to 5,773.50, while Nasdaq 100 futures similarly fell 0.1% to 20,060.50. In contrast, Dow Jones futures edged up slightly to 42,462.0.

Record Highs for Dow, S&P After Fed’s Rate Cut

Both the Dow Jones and the S&P 500 closed at record levels on Thursday, with lower interest rates boosting investor optimism.

The Fed reduced rates by 50 basis points, the upper range of expectations, initiating a broader easing cycle likely to drop rates by 125 bps by year-end. The S&P 500 climbed 1.7% to 5,713.64, while the Nasdaq Composite soared 2.5% to 18,011.51. The Dow Jones rose 1.3% to 42,025.19.

Tech stocks led the rally, with NVIDIA Corporation seeing a notable 4% jump.

However, Powell emphasized that the central bank had no intention of implementing ultra-low rates, signaling that the long-term neutral rate could be much higher than in recent years. This raised concerns about the underlying state of the U.S. economy, especially amid growing signs of a cooling labor market.

FedEx Stumbles on Poor Earnings, Sparks Economic Worries

FedEx saw its stock tumble 11% following weak quarterly earnings, missing expectations by a large margin.

The company cited a shift toward cheaper, slower shipping options by customers, along with weaker industrial demand as key factors behind the disappointing performance. Given FedEx’s integral role in global trade, the poor earnings sparked fresh concerns about a broader economic slowdown.