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BofA expects Fed to go for 75-bp cut in Q4

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US big banks rise after Fed's jumbo rate cut

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Futures up: Dow 1.1%, S&P 500 1.6%, Nasdaq 2.07%

(Updated at 7:17 a.m. ET/1117 GMT)

By Johann M Cherian and Purvi Agarwal

Sept 19 (Reuters) - U.S. stock index futures jumped on

Thursday, with those linked to the tech-heavy Nasdaq climbing 2%

after the Federal Reserve started its easing cycle with a jumbo

50-basis-point cut to interest rates, aiding a soft landing for

the world's biggest economy.

Rate-sensitive growth stocks that have led much of this

year's rally such as Microsoft ( MSFT ), Meta and

Alphabet advanced 2% in premarket trading.

Semiconductor stocks also climbed. Nvidia ( NVDA ) rose

3.2%, while Advanced Micro Devices ( AMD ) and Broadcom ( AVGO )

gained 3.3% with the broader market.

Futures tracking the domestically focused Russell 2000 index

shot up 3%.

A lower interest environment could mean prospects of lower

operating costs and greater profits for credit-dependent

companies.

At 7:17 a.m. ET, Dow E-minis were up 456

points, or 1.1%, S&P 500 E-minis were up 91.25 points,

or 1.61% and Nasdaq 100 E-minis were up 404.75 points,

or 2.07%.

After delivering its super-sized verdict on Thursday, the

Fed assured that it was not an emergency response and unveiled

projections that analysts say reflect conditions for the economy

to achieve a goldilocks scenario, where growth is steady and

inflation and unemployment stay low.

"The Fed took out an insurance policy against further

labor market weakening. Chair (Jerome) Powell emphasized that

there are no signs of an imminent downturn in what he described

as a 'strong economy'," said Ronald Temple, chief market

strategist at Lazard.

Traders now see a 67% chance that the central bank will

lower interest rates by 25 basis points at its November meeting,

as per the CME Group's FedWatch tool.

BofA Global Research now anticipates a total of 75 bps rate

cuts by the end of this year, compared with 50 bps forecast

earlier. Citigroup ( C/PN ) revised its rate-cut expectations for

December to a smaller 25 bps, from a forecast of a bigger move.

Goldman Sachs now expects consecutive 25 bps cuts from

November 2024 through June 2025.

Market reaction in the aftermath of the decision was muted,

with all the three indexes closing slightly lower in the

previous session.

However, data going back to 1970 from Evercore ISI showed

the S&P 500 has posted an average 14% gain in the six months

following the first reduction of a rate-cutting cycle.

September has generally been a disappointing month for U.S.

equities with the S&P 500 notching an average loss of

1.2% since 1928.

The benchmark index has logged losses so far this month but

is close to record highs, and the blue-chip Dow is just

short of its respective milestone.

On the data front, weekly jobless claims and existing home

sales for August are on investors' radar.

JPMorgan Chase & Co ( JPM ) added 1.1%, Bank of America ( BAC )

climbed 1.7% and Wells Fargo ( WFC ) advanced 1.8% after

the big banks lowered their respective prime rates. Citigroup ( C/PN )

also rose 1.9% after cutting its base lending rate.

Progyny ( PGNY ) was among a few stocks that traded

lower. The fertility benefits management firm plunged 26% after

a significant client notified the company it had elected to

exercise a 90-day option to terminate its services agreement.