By Lisa Pauline Mattackal
(Reuters) -U.S. stock futures rose ahead of an interest-rate decision by the Federal Reserve on Thursday, building on a sharp rally set off by Donald Trump's stunning comeback as U.S. president for a second time.
Traders have about fully priced in a 25-basis point rate cut, but will keep a close watch on the central bank's policy statement for clues on the future path of monetary easing.
"Futures prices suggest it will be a much quieter day today on the US markets, albeit still with some gains," said Russ Mould, investment director at AJ Bell.
"Investors might simply be taking stock of events and waiting to see the scale of a rate cut from the Fed."
Investor expectations that Trump would lower corporate taxes and loosen regulations had in the previous session lifted all three major indexes to a record high.
The Dow, S&P 500 and small-cap Russell 2000 notched their biggest one-day rise since November 2022, while the Nasdaq hit its best day since February.
Dow E-minis were up 104 points, or 0.24%, S&P 500 E-minis were up 14.75 points, or 0.25% and Nasdaq 100 E-minis were up 65.25 points, or 0.31%.
Futures tracking the small cap index jumped 0.7%, trading at a near three-year high.
Traders have trimmed their bets to just two rate cuts in 2025 on consistently robust economic data, while also taking into account the chances of higher inflation stemming from Trump's proposed tariffs and government spending.
"After December we now see the Fed easing at a quarterly pace, with the next ease in March and continuing until the funds rate reaches 3.5%," J.P. Morgan analysts said in a note.
Focus is also on whether Republicans could win control of both houses of Congress, making it easier for Trump's policies to be enacted.
Meanwhile, rate-sensitive equities are facing some pressure as Treasury yields soared after Trump's win. [MKTS/GLOB]
Stocks that surged after his sweeping victory gave back gains in premarket trade, with Trump Media & Technology losing 13%.
Qualcomm (NASDAQ:QCOM) shares jumped 7.1% after the chipmaker forecast current-quarter sales and profit above estimates, while U.S.-listed shares of chip designer Arm Holdings (NASDAQ:ARM) fell 6.2% as its quarterly forecasts disappointed investors.
Shares of vaccine maker Moderna (NASDAQ:MRNA) gained 6.7% after reporting a surprise third-quarter profit on higher COVID-19 vaccine sales.
Halliburton (NYSE:HAL) dipped 1.5% after missing quarterly profit estimates, as a slowdown in drilling activity in North America weighed on demand for oilfield services and equipment.
The VIX, Wall Street's "fear gauge," was trading at a six-week low.
Weekly initial jobless claims data is due at 8:30 a.m. ET, while earnings reports from companies, including Ralph Lauren (NYSE:RL) and WW Kellogg (NYSE:K) are, are expected before the bell.