By Johann M Cherian and Shristi Achar A
(Reuters) -U.S. stocks were poised to open lower on Wednesday as investors took a breather from a rally that was sparked by the Federal Reserve's likely pivot to a dovish policy, while FedEx (NYSE:FDX) tumbled after issuing a grim outlook.
All the three main indexes have advanced over 2% since the Fed's Dec. 13 verdict where policymakers projected lower policy rates by the end of 2024, with the blue-chips Dow notching fresh record highs and the S&P 500 within arm's reach of its highest closing levels since January 2022.
Since then central bank officials have attempted to keep investor euphoria in check, the latest being Chicago Fed President Austan Goolsbee who said further progress on beating back inflation will be the decisive factor in any central bank decision next year to reduce interest rates.
"Just the fact that we've had such a strong run (of gains) in the overall market, it is taking a little bit of a break," said Robert Pavlik, senior portfolio manager at Dakota Wealth.
Still, traders expect the Fed to ease credit conditions by over 125 basis points by September next year, with a 79% chance that the first cut of at least 25 basis points could come in as early as March 2024, according to the CME Group's (NASDAQ:CME) FedWatch tool.
Some analysts, however, pointed that the market expectations around rate cuts might be too aggressive.
"I don't think the economy is slipping to the point where you need four or five rate cuts ... most likely two rate cuts are coming in 2024 and then the Fed is going to be on hold after that," Pavlik said.
Meanwhile, FedEx slid 10.9% in premarket trading after the global delivery firm cut its full-year revenue forecast and reported quarterly profit that fell far short of analysts' targets, as its largest Express business saw demand from the U.S. Postal Service drop.
The results also dragged down shares of rival United Parcel Service (NYSE:UPS) by 3.2%.
On the economic data front, investors await consumer confidence data for December and November existing home sales, both due at 10:00 a.m. ET. Consumer confidence is expected to improve to 104 this month.
At 8:29 a.m. ET, Dow e-minis were down 56 points, or 0.15%, S&P 500 e-minis were down 8.25 points, or 0.17%, and Nasdaq 100 e-minis were down 42 points, or 0.25%.
Among tech-heavy Nasdaq constituents, Nvidia, Apple (NASDAQ:AAPL) and Amazon.com (NASDAQ:AMZN) slipped between 0.4% and 0.6% before the bell.
Alphabet (NASDAQ:GOOGL) outperformed its megacap peers, up 1.2% after a report said Google plans to reorganize a big part of its 30,000-person ad sales unit, citing a person with knowledge of the situation.
General Mills (NYSE:GIS) slipped 4.3% after the Cheerios cereal-maker trimmed its annual sales forecast due to slowing demand for its higher-priced products.
Steelcase dropped 7.6% after the furniture maker reported a decline in its third-quarter revenue.