Nasdaq 100 and S&P500: Futures Recover as Williams Revives Rate Cut Forecast

Futures Rebound as Fed’s Williams Signals December Rate Cut Potential

U.S. stock futures moved higher Friday after New York Federal Reserve President John Williams indicated the central bank could approve another rate cut in December. His comments helped steady sentiment following a sharp selloff in AI-linked names and a week dominated by weak breadth across major exchanges. S&P 500 futures rose 0.47%, Nasdaq-100 futures gained 0.37%, and Dow futures advanced 0.7%.

Williams said policy remains “modestly restrictive” and suggested the Fed still has room to ease further to bring rates closer to neutral. Traders quickly rebuilt expectations for a third 2024 cut next month, providing support to risk assets that had been under pressure from stronger jobs data and fading conviction over near-term easing.

Can Fed Support Offset AI Market Pressure?

AI stocks, which were bracing for another difficult session, pared losses in premarket trading after Williams’ remarks. Nvidia was last little changed, while AMD turned positive.

This follows Thursday’s volatile trade where Nvidia swung from a 5% intraday gain to a 3% loss, extending its monthly decline to more than 10%. Investors had initially cheered Nvidia’s strong fiscal third-quarter results before the latest labor data tempered rate-cut expectations and triggered broad selling.

How Broad Was Thursday’s Market Decline?

Breadth data showed intense selling pressure across U.S. exchanges. On the NYSE, declining issues represented nearly 76% of all stocks traded, and almost 81% of total share volume moved lower. New 52-week lows outnumbered highs 174 to 50.

Nasdaq reflected similar stress, with more than 73% of listed names falling and declining volume accounting for nearly 82% of the total. New lows surged to 513 versus 125 new highs, underscoring how widespread the retreat was.

Are Investors Overreacting to Recent Weakness?

Some strategists argue the pullback reflects normal profit-taking rather than the start of a deeper downturn. The S&P 500 is down 2.9% for the week, the Dow nearly 3%, and the Nasdaq 3.6%, as investors trimmed exposure to several high-performing stocks.

Carson Group’s Ryan Detrick noted that earlier in the month conditions had become “frothy,” and the recent stretch of selling may help reset sentiment and shake out weaker positions.

What Should Traders Expect Next?

The short-term outlook remains tied to incoming economic data and how it shapes expectations for a December rate cut. Futures are attempting to stabilize following Thursday’s washout, helped by Williams’ signal that additional easing is still possible.

However, traders are watching whether the intraday lows set early Friday hold: S&P 500 futures at 6525.00, Nasdaq-100 futures at 23904.50, and Dow futures at 46566.87.

If these intraday lows fail, the concern among traders would center on a renewed loss of confidence in near-term Fed support. A break below those levels would likely reinforce fears that recent labor data has weakened the case for additional cuts and could intensify risk-off behavior, especially in high-valuation segments such as AI hardware and software. That type of sentiment shift would make market participants far more reactive to every economic release over the coming sessions.

For now, Williams’ comments have given the market a foundation for a cautiously bullish short-term view. But traders remain alert to the possibility that another wave of selling could emerge if incoming data challenges expectations for a December move.

More Information in our Economic Calendar.