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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 0.16%, S&P 500 up 0.18%, Nasdaq up 0.25%

(Updated at 8:41 a.m. ET/1241 GMT)

By Johann M Cherian and Purvi Agarwal

Sept 18 (Reuters) - Wall Street's main indexes were set

for a slightly higher open 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% to

combat inflation. But the focus recently has been more about a

moderating labor market.

At 8:41 a.m. ET, Dow E-minis were up 66 points,

or 0.16%, S&P 500 E-minis were up 10 points, or 0.18%

and Nasdaq 100 E-minis were up 48 points, or 0.25%.

Futures linked to the Russell 2000 index, tracking

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

environment, slipped 0.11%.

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 data

hinted at a still-robust economy ahead of the Fed decision,

expected at 2:00 p.m. ET.

Economic indicators over the previous one month have been

relatively mixed, making investors nervous ahead of the least

predictable Fed decision in years.

Following dovish commentary from present and former Fed

officials recently, traders are now pricing in 63% 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 37% 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.

"Rarely has the market been so torn, so close to a Fed

decision. Most macro watchers believe the ongoing strength of

the economy justifies a 25 bps cut," said Seema Shah, chief

global strategist at Principal Asset Management.

"Furthermore, history suggests a 50 bps cut is more

likely in times of severe financial stress or major job losses -

neither is present today."

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.

Stock

options are pricing

an about 1.1% swing, in either direction, for the S&P 500

after the verdict on Wednesday, according to options analytics

service ORATS.

Heavyweight growth stocks edged higher in premarket trading.

Alphabet added 0.9%, while Meta rose 0.5%.

Among top movers, Intuitive Machines ( LUNR ) jumped 54%

after clinching a $4.8 billion navigation services contract from

NASA.

General Mills ( GIS ) fell 2.7% after the Cheerios maker

posted first-quarter results.

Sirius XM Holdings ( SIRI ) gained 2.5% after Guggenheim

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

On the data front, housing starts stood at 1.356 million

in August, compared to estimates of 1.31 million as per

economists polled by Reuters.