Dow, S&P 500, Nasdaq futures step higher as focus turns to Federal Reserve’s rate path

While traders took a Presidents’ Day break, Fed speakers lined up to reiterate they need to hold off on rate cuts in light of sticky inflation — though there was a glimmer of hope on offer.

The chorus of comments is setting the stage for Wednesday’s release of minutes from the Fed’s January meeting, which will be closely watched by rate-betting investors.

Patience is the keyword as policymakers wait for price pressures to ease, Philadelphia Fed president Patrick Harker said on Monday.

Meanwhile, Michelle Bowman opposed any easing until a better picture emerges of Trump’s tariffs.

“It will be very important to have a better sense of these policies, how they will be implemented, and establish greater confidence about how the economy will respond” before cutting rates further, the Fed governor said.

Next up, Christopher Waller suggested that Trump’s tariffs will have just a modest impact on inflation. That means the Fed can try to set those aside when setting rates, the central bank governor argued.

Waller also suggested that policymakers can resume cuts “at some point this year” if the current inflation bump fades, further striking a note of optimism.

More Fedspeak is due on Tuesday from officials Mary Daly and Michael Barr.

Stocks in Europe held steady on Tuesday as the US and Russia started discussing an end to the war in Ukraine, after rallying on Monday amid a run-up in defense names.

Presidents Trump and Putin have sent teams to the talks in Saudi Arabia, but Ukraine and Europe have been sidelined. Leaders in the region held an emergency summit in Paris instead, where they agreed to increase defense spending.

The pan-European Stoxx 600 (^STOXX) index edged up around 0.1% as defense stocks Rheinmetall (RHM.DE) and Dassault (DSY.PA) rose to fresh all-time highs.

Among individual benchmarks, Germany’s DAX (^GDAXI) and the CAC (^FCHI) in Paris traded broadly flat. London’s FTSE 100 index (^FTSE) tipped roughly 0.2% higher.