U.S. futures muted as attention turns to upcoming Fed meeting

Investing.com -- U.S. stock futures were muted on Monday, hovering just below the flatline, as investors prepared for the Federal Reserve's final two-day policy meeting this year.

By 07:08 ET (12:08 GMT), the Dow futures contract was unchanged, S&P futures had lost 3 points or 0.1%, and Nasdaq 100 futures had shed 27 points or 0.2%.

Both the benchmark S&P 500 and tech-heavy Nasdaq Composite posted their highest closing levels since early 2022 in the prior session, while the 30-stock Dow Jones Industrial Average notched its sixth consecutive weekly gain -- its longest streak of positive weeks since 2019.

A batch of jobs market data on Friday buoyed hopes that the Fed might be able to engineer a so-called "soft landing" for the U.S. economy. In this scenario, the central bank's aggressive string of interest rate hikes -- which have brought borrowing costs up to more than two-decade highs -- would succeed in quelling elevated inflation without triggering a broader economic meltdown.

Figures showed that nonfarm payrolls increased by more than anticipated in November, average hourly earnings inched up on a monthly basis, and the unemployment rate dipped. Although the numbers pointed to a resilient labor market that could push up wages and inflation, they were more widely interpreted as a sign that the Fed's tightening cycle may not plunge the world's largest economy into recession.

The Federal Open Market Committee is tipped to hold rates at their current range of 5.25% to 5.50% on Wednesday. Much of the focus will likely be on comments from Fed Chair Jerome Powell, as he faces pressure to lay out a timeline for future rate cuts. Powell, who has stressed that the Fed will only move "carefully," is still expected to attempt to give the bank some flexibility with its upcoming decisions.

"[I]t is too early to declare victory [over inflation], and we expect him to warn that monetary policy would likely need to remain restrictive for some time in order to restore price stability," analysts at UBS said in a note to clients dated Dec. 8.

In the wake of last week's jobs data and separate numbers showing the slowest annual rise in underlying price gains in two years in October, markets are now pricing in a nearly 50% chance of a quarter-point rate decrease in borrowing costs as soon as May, according to Investing.com's Fed Rate Monitor Tool. The probability of a cut at the Fed's March meeting stands at a little under 43%, down from 53% in the prior week.

Citing "better inflation news," analysts at Goldman Sachs (NYSE:GS) advanced their predictions for the first of two rate reductions in 2024 up to the third quarter. The brokerage had earlier anticipated that the initial cut would take place next December.

Cigna scraps Humana tie-up talks

U.S. health insurer Cigna (NYSE:CI) has ended its drive to acquire peer Humana (NYSE:HUM), according to multiple media reports, pulling the plug on a deal that would have created an insurance behemoth worth over $140 billion.

The reports said neither Cigna nor Humana could agree on the financial arrangements, while concerns also swirled around the intense regulatory scrutiny that the tie-up would likely have raised.

The abandoned talks come as Connecticut-based Cigna announced that it is aiming to roll out an additional $10B in share buybacks. In a statement, Chairman David Cordani argued that the company's shares are "significantly undervalued and repurchases represent a value-enhancing deployment of capital."

Shares in Cigna were higher in U.S. premarket trading on Monday.

Macy's (NYSE:M) shares also surged on reports of a $5.8 billion buyout offer from real estate-focused investing business Arkhouse Management and global asset manager Brigade Capital Management.

The investor group proposed a price of $21 per share for the department store operator, unnamed sources familiar with the matter told the Wall Street Journal. The offer represents a premium of roughly 21% based on Macy's closing stock price of $17.39 on Friday.

Oil prices dip as Fed gathering looms large

Oil prices moved slightly lower on Monday, in a sign of caution among traders prior to the Fed's gathering.

By 07:09 ET, Brent oil futures expiring February were down 0.5% at $75.47 a barrel, while West Texas Intermediate crude futures had slipped by 0.6% to $71.05 per barrel.

Crude prices were nursing seven straight weeks of losses, their longest streak of weekly declines since 2018, partly due to skepticism over production cuts by the Organization of the Petroleum Exporting Countries and its allies including Russia, as well as weak economic prints from top importer China.

Elsewhere, the U.S. dollar index, which tracks the greenback against a basket of other currencies, was marginally higher, while spot gold fell 0.4% to $1,995.76 per troy ounce.

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This article first appeared in Investing.com