Futures climb after Fed’s Williams signals December rate cut

Investing.com -- U.S. stock index futures gained on Friday morning following comments from Federal Reserve President John Williams that suggested a potential interest rate cut in December.

S&P 500 futures were up 0.5% while Nasdaq futures erased earlier declines of about half a percent to trade up 0.4%. All three major indexes were on track for their worst weekly drop since March.

In a speech at the Central Bank of Chile Centennial Conference, Williams said he sees "room for a further adjustment in the near term to the target range for the federal funds rate." He noted that downside risks to employment have increased while upside risks to inflation have lessened.

Williams described current monetary policy as "modestly restrictive" and indicated a desire to move the policy stance "closer to the range of neutral."

Following Williams’ comments, traders boosted the odds of a December rate cut to more than 50%, up from nearly 37% earlier.

The Nasdaq has retreated significantly from its October peak and is headed for a steep decline in November. Market participants have expressed skepticism about technology sector monetization prospects, circular spending within the industry, and rising debt issuance.

In his remarks, Williams acknowledged that U.S. inflation has temporarily stalled at around 2.75%, partly due to trade policies that he estimates have added between 0.5 and 0.75 percentage points to the current inflation rate. However, he expects inflation to resume its downward path toward the Fed’s 2% target by 2027.

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