S&P 500 and Dow futures move away from records as Fed cheers fade

As the euphoria over the rate cut faded, U.S. stocks were on the verge of falling from record highs on Friday. Earnings from FedEx (FDX) provided a reality check.

Futures for the S&P 500 (ES=F) fell about 0.3% after the benchmark index closed at an all-time high. Futures for the Dow Jones Industrial Average (YM=F) held steady after hitting their own record close. Leading the downward move were contracts for the tech-heavy Nasdaq 100 (NQ=F), which fell 0.5%.

Stocks rose sharply on Thursday as investors embraced Chairman Jerome Powell's message that the Federal Reserve made a sharp interest rate cut to support the economy, not to bail it out – an idea supported by unemployment data.

That rapid rally is now stalling as evidence continues to emerge that growth may still be at risk. Wall Street is still wondering whether the Fed has failed to keep the economy on track for a “soft landing.” Traders are pricing in deeper cuts this year than central banks' “dot plot” forecasts suggest, Fed funds futures show.

Read more: What the Fed's interest rate cut means for bank accounts, CDs, loans and credit cards

In addition, the Fed-fueled euphoria is fueling the risk of a bubble, according to a top Bank of America strategist. Michael Hartnett said stock prices are currently pricing in a level of monetary easing and earnings growth that is prompting investors to chase profits.

Late Thursday, FedEx reported a sharp drop in profits, missing Wall Street estimates. The delivery service – an indicator of the economy – suffered a share price loss of almost 14 percent in premarket trading.

Elsewhere, Nike (NKE) shares rose after the sporting goods maker appointed a new CEO amid pressured sales.