US open: Stocks edge lower as investors await Fed rate cut

(Sharecast News) - US stock markets started on the back foot on Wednesday as investors scaled back risk appetite ahead of the Federal Reserve's latest policy decision.

By 0953 ET, the Dow was trading 0.3% lower while the S&P 500 and Nasdaq were both down 0.1%. Nevertheless, all three indices were continuing to trade close to their all-time highs.

The Federal Open Market Committee meeting is expected to announced its policy decision at 1400 ET, with a 25-basis point cut in the Federal Funds Rate all but certain. The expectation, according to consensus forecasts at least, is for two further 25bp cuts before the year-end, to take the FFR to the 3.5-3.75% range.

"Today sees the FOMC likely embark upon their first rate cut of the year, with Donald Trump finally getting his way despite failing to remove Powell and Cook in the process," said Joshua Mahony, chief market analyst at Scope Markets.

"Inflation fears do remain prevalent, with headline CPI rising 0.4% last month. However, Trump's most influential actions have been the policy adjustments that have led to the deterioration in the jobs market, with declining payrolls, rising jobless claims, and falling job openings highlighting an economy in need of central bank support."

The yield on a 10-year US Treasury was down 0.4bp at 4.031% just after the opening bell, while the US Dollar Index was little changed at 96.74, nearing its lowest level since the start of 2022.

In economic data, two leading economic indicators for the US housing market came in well under forecasts on Wednesday, pointing to a slump in activity for new residential construction. Building permits - a closely watched gauge of future construction activity - dropped 3.7% to 1.312m in August, hitting their lowest monthly level since May 2020, while housing starts sank 8.5% to 1.307m, teetering at close to its lowest level in five years.

In equity news, US-listed shares of Unilever were rising despite Wednesday's news that the co-founder of its owned brand Ben & Jerry's quit on Wednesday. Jerry Greenfield resigned citing interference from the parent company over the brand's social activism and criticism of Israel's killing of Palestinian civilians.

Nvidia was heading lower on the back of reports that Chinese regulators were banning domestic tech giants from purchasing Nvidia's AI chips.

HR tech firm Workday was a high riser after activist outfit Elliott Management revealed on Tuesday that it had built a stake of more than $2bn in the company.