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Fed rate decision due at 2:00 p.m. ET

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Intuitive Machines ( LUNR ) soar after clinching NASA contract

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Sirius XM gains after Guggenheim upgrades stock

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Futures: Dow up 0.14%, S&P 500 up 0.13%, Nasdaq up 0.20%

(Updated at 7:05 a.m. ET/1105 GMT)

By Johann M Cherian and Purvi Agarwal

Sept 18 (Reuters) -

U.S. stock index futures were marginally higher on Wednesday

as the Federal Reserve was widely expected to deliver its first

interest rate cut in more than four years, with most investors

betting on a 50-basis point reduction.

Borrowing costs have stayed at their highest levels in over

two decades since July 2023, when the central bank last hiked

interest rates by 25 basis points to between 5.25% and 5.50%.

At 7:05 a.m. ET, Dow E-minis were up 58 points, or

0.14%, S&P 500 E-minis were up 7.5 points, or 0.13% and

Nasdaq 100 E-minis were up 38.5 points, or 0.20%.

Futures linked to the Russell 2000 index, tracking

small caps which tend to fare better in a lower interest-rate

environment, were also flat.

The benchmark S&P 500 and the blue-chip Dow

both recovered from an early August rout to clinch intraday

record highs in the previous session, after a batch of economic

data hinted at a still-robust economy ahead of the Fed

decision, expected at 2:00 p.m. ET.

However, uncertainty over the size of the rate cut has kept

investors on the sidelines. Following dovish commentary from

present and former Fed officials recently, traders are now

pricing in 65% chances of a bigger 50-basis-point reduction,

according to the CME Group's FedWatch tool.

Analysts, however, caution that an outsized move from the

central bank could spook markets, which are already nervous

about the overall health of the world's biggest economy.

Bets for a smaller 25-bps cut have now slipped to 35% from

86% a week ago. Investors will also be watching for comments

from Fed Chair Jerome Powell at 2:30 p.m. ET to gauge the

central bank's stance on the economy and prospects of further

rate cuts this year.

"Powell would need to provide solid macro justifications for

a half-point move to avoid sounding too sensitive to market rate

expectations," analysts at ING Bank said.

"Incidentally, Powell would need to show the 50 bps cut

isn't a 'panic' move. Failing to offer such reassurance can

cause turmoil in equities."

Markets have rallied this year, with all three major indexes

setting record highs on prospects of lower interest rates as

inflation moderated and the jobs market showed gradual signs of

cooling.

Heavyweight growth stocks edged higher in premarket trading.

Nvidia ( NVDA ) inched up 0.10%, while Alphabet and

Microsoft ( MSFT ) added 0.73% and 0.34%, respectively.

Among top movers, Intuitive Machines ( LUNR ) jumped 51.6%

after clinching a $4.8 billion navigation services contract from

NASA.

General Mills ( GIS ) fell 1.3% after the Cheerios maker

posted first-quarter results.

Sirius XM Holdings ( SIRI ) gained 2.23% after Guggenheim

upgraded the radio company's stock to "buy" from "neutral".

On the economic data front, a report on housing starts

for August is due at 8:30 a.m. ET.