U.S. stock index futures trended higher on Tuesday, as investors were optimistic about the economy achieving a goldilocks “soft landing” scenario, while also cheering a bumper stimulus package out of China.
The S&P 500 and the blue-chip Dow closed at record highs in the previous session after a survey signaling steady business activity soothed concerns of an imminent recession, and as a number of policymakers supported further policy easing by the Federal Reserve.
Yields on longer-dated Treasury bonds rose as traders priced in a greater likelihood of the economy achieving growth with low inflation and unemployment.
However, with equities on the benchmark index already trading above long-term averages and clarity still lacking about the size of the Fed’s next move, some investors stayed away from big bids.
At 5:28 a.m. ET, Dow E-minis were up 58 points, or 0.14%, S&P 500 E-minis were up 9.75 points, or 0.17% and Nasdaq 100 E-minis were up 61 points, or 0.30%.
A market rally in the aftermath of the Fed’s decision to cut rates last week has now set up the three main indexes for monthly gains, defying a historical trend of losses on average in September.
Markets now await remarks from Governor Michelle Bowman later in the day. She had voted for a 25 basis point rate reduction on signs of persistent price pressures, as opposed to the larger 50 bps rate cut the central bank delivered in the previous week.
Traders are pricing in the Fed’s November decision to be a coin toss, with bets neither strongly favoring a 50 bps nor a 25 bps reduction, as per the CME Group’s FedWatch Tool.
On the data front, a survey is due at 10:00 a.m. ET, and is expected to show consumer confidence improved in September from the previous month. Still, the main focus will be on Friday’s Personal Consumption Expenditure figure for August.
Among top premarket movers, U.S.-listed shares of Chinese firms such as Alibaba (NYSE: BABA) and PDD Holdings (NASDAQ: PDD) added 5% each, and Li Auto (NASDAQ: LI) advanced 7.3% after the world’s second-largest economy, China, unveiled its biggest stimulus since the pandemic to pull the economy out of its deflationary funk.
The upbeat mood also lifted copper miners including Freeport-McMoRan (NYSE: FCX), Southern Copper (NYSE: SCCO), and U.S.-listed shares of Rio Tinto (NYSE: RIO) that jumped over 4.6% each as copper prices surged.
Visa (NYSE: V) lost 1.6% after a report showed the U.S. Department of Justice plans to file a lawsuit against the payments network operator, alleging that it illegally monopolized the country’s debit card market.
Starbucks (NASDAQ: SBUX) dropped 2% after Jefferies downgraded the coffee chain to “underperform” from “hold”, while Salesforce (NYSE: CRM) rose 2.1% after Piper Sandler upgraded the software company to “overweight” from “neutral”.
(Source: ReutersReuters)
