(Reuters) – U.S. stock index futures slipped on Wednesday, with investors avoiding big bets as they awaited more clues on the health of the economy and the outlook for interest rate cuts after the Federal Reserve kicked off its policy easing cycle a week ago.

The benchmark S&P 500 and the Dow closed at record highs for the second straight time in the previous session, with most of the heavy lifting done by commodity-linked stocks after top economy China unveiled a large stimulus package.

However, a weak consumer sentiment report sparked angst about the labor market’s health among investors who are worried if the Fed’s decision to cut rates by a rare 50 basis points in the previous week was due to a sharp slowdown in the economy.

Odds that the central bank will lower borrowing costs by another 50 basis points at its November meeting have ticked up to 58.2%, from a coin toss earlier in the week, as per the CME Group’s FedWatch Tool. Traders see borrowing costs falling by nearly 79 bps before the year ends, as per LSEG data.

At 5:49 a.m. ET, Dow E-minis were down 37 points, or 0.09%, S&P 500 E-minis were down 9.25 points, or 0.16% and Nasdaq 100 E-minis were down 63.5 points, or 0.31%.

Wall Street’s main indexes have rallied through the year on expectations of interest rate cuts and on optimism that artificial intelligence integration could boost corporate profits.

The S&P 500 is also trading at valuations high above longterm averages, and analysts forecast further upside momentum for stocks to be weak.

On the day, data on new home sales for August are expected at 10:00 a.m. ET. However, the next test for markets will be weekly jobless claims and personal consumption expenditure data for August due later in the week.

Remarks from Governor Adriana Kugler, due after markets close, will also be parsed. But the spotlight will be on Fed Chair Jerome Powell’s speech at the New York Treasury Market Conference on Thursday.

Among major premarket movers, KB Home fell 7.1% after the homebuilder missed Wall Street expectations for third-quarter profit.

Tyson Foods lost 1.4% after Piper Sandler downgraded the meatpacker to “underweight” from “neutral”, while Hewlett Packard Enterprise rose 2.4% after Barclays raised its rating on the stock to “overweight” from “equal-weight”.

U.S.-listed shares of Chinese companies, which surged in the previous session, fell. Some analysts flagged that the massive stimulus package the country announced on Tuesday might not immediately spur up weak domestic demand.

Alibaba lost 3.5%, Li Auto dropped 4.3% and JD.com slid 5%.

(Reporting by Johann M Cherian in Bengalurul Editing by Maju Samuel)

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