U.S. index futures saw modest gains on Monday following several weeks of upward momentum, with investors eagerly anticipating key inflation data to gauge potential interest rate adjustments for the year.
Last week, the S&P 500 and Nasdaq Composite achieved their third consecutive week of gains, a feat not seen since January, while the Dow marked its most substantial weekly increase since mid-December.
Supported by robust earnings reports and indications of a stabilizing U.S. labor market, the indexes hovered near their peaks, fostering expectations of one or two rate cuts by the Federal Reserve in 2024.
This week, investors will closely monitor various economic indicators, including monthly producer and consumer prices, retail sales, and weekly jobless claims. Of particular interest is Wednesday’s inflation data, with economists forecasting a 0.3% month-over-month increase in core consumer prices for April, translating to an annual rise of 3.6%.
Market strategist Ronald Temple highlighted the significance of service inflation excluding shelter and energy services, noting that any significant deviations from expectations could impact market sentiment and influence the likelihood of additional Fed rate cuts.
Although recent statements from Fed policymakers have emphasized that rate hikes are not imminent, uncertainty surrounds the timing of the first rate cut. Cleveland Fed President Loretta Mester is scheduled to address this issue later in the day.
Traders are currently pricing in a 42 basis points reduction in rates by the end of 2024, with a 49% probability of a rate cut in September, according to LSEG’s rate probabilities app.
Major corporations, including Home Depot, Walmart, Cisco, and Alibaba, are slated to release earnings reports this week. So far, 77.3% of S&P 500 companies reporting through Friday have exceeded analysts’ profit estimates, surpassing the long-term average.
As of 05:37 a.m. ET, S&P 500 e-minis gained 0.12%, Nasdaq 100 e-minis rose by 0.22%, and Dow e-minis climbed by 0.06%. Pre-market activity saw Alphabet decline by 1.8%, while Microsoft edged up by 1.1%.
Arm Holdings experienced a 2.6% increase after reports that the SoftBank Group-backed chip designer intends to develop AI chips, with plans to introduce the first products in 2025.
Meme stocks such as GameStop surged by 21.2%, building on a 57% increase in May, while AMC Entertainment added 6.9%.
