Stock markets today: Jumbo Fed returns to table as US futures rise

US stock futures edged higher on Friday, setting the stage for strong weekly gains after Wall Street expectations for a jumbo interest rate cut by the Federal Reserve rose overnight.

S&P 500 futures (ES=F) rose 0.2%, while Nasdaq 100 futures (NQ=F) added 0.1%, pointing to a fifth day of gains for both gauges amid a rebound for technical stocks. Dow Jones Industrial Average futures (YM=F) added roughly 0.2%.

Stocks are rising as markets warm again to the prospect of a half-point rate cut by the Fed, after virtually shutting down the possibility of a major pivot in light of recent inflation and jobs data. Traders are now pricing in a 45% chance of a 50 basis point move next week, compared with 15% at one point on Thursday.

Read more: Fed forecast for 2024: What experts say about rate cut prospects

The likelihood of a 0.5% cut rose in light of reports in the Financial Times and Wall Street Journal that the size of the Fed's Sept. 18 decision would be a close call. Adding to the debate, influential former New York Fed President Bill Dudley said there was a “strong case” for deeper cuts.

The yield on the benchmark 10-year Treasury (^TNX) fell early Friday, down 3 basis points to about 3.65%. At the same time, the yield on the 2-year note, which is seen as sensitive to monetary policy, fell to just above 3.58%.

Markets have been whipped up in recent days by shifting speculation about whether the Fed will opt for a quarter-point or half-point cut when it makes its first expected rate cut this cycle. Worries about a sluggish labor market and the risk of a recession have helped feed that volatility — which Wall Street believes could continue if a 0.5% decline comes through.

In individual stocks, Adobe ( ADBE ) shares dipped in pre-market trade after the software maker's outlook failed to show improvement from its AI push. Meanwhile, Oracle ( ORCL ) stock rose again thanks to an optimistic forecast for revenue growth driven by cloud demand over the next five years.

Boeing ( BA ) shares fell as factory workers went on strike, halting production across the planemaker's Seattle hub, its largest.