U.S. stock index futures inched higher on Monday, with the markets focused on results from AI-darling Nvidia (NASDAQ: NVDA) and a key inflation report due later in the week, while investors remained optimistic about a September rate cut from the central bank.
Markets welcomed Federal Reserve Chair Jerome Powell’s comments on Friday when he said “the time has come” to lower borrowing costs in the light of diminishing upside risk to inflation and moderating labor demand.
The main indexes rallied more than 1% in the previous session, with the S&P 500 and the Dow less than 1% from their respective record highs. Rate-sensitive small caps logged their strongest day in six weeks as equities continued to pare losses from the early-August market rout.
Traders are now betting on either a 25-basis-point or a 50-basis-point rate cut in September. Odds of the former have dropped to 63.5% from more than 70% in the previous week, while odds of a 50-bps cut have risen to 36.5% from about 30% last week, according to the CME Group’s Fed Watch tool.
“Employment data of late has been weak… as the inflation side seems to be under control, the developments in the employment leg will determine the size of the cuts,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
Attention will turn to the gross domestic product estimates for the second quarter along with July Personal Consumption Expenditure data, the central bank’s preferred inflation gauge, due later in the week.
At 7:21 a.m. ET, Dow e-minis were up 49 points, or 0.12%, S&P 500 e-minis were up 9.25 points, or 0.16%, and Nasdaq 100 e-minis were up 5 points, or 0.03%.
As earnings season draws to a close, chip designer Nvidia (NASDAQ: NVDA), whose results are scheduled on Wednesday, traded nearly 1% higher in premarket trading.
Markets have been less forgiving this quarter of highly valued megacap stocks, which spearheaded the excitement around artificial intelligence.
They will scrutinize Nvidia’s earnings to justify the stock’s more than 160% year-to-date jump, which pushed its market cap value to No. 2, just below that of Apple, as of Friday’s close.
“The expectations remain sky-high. Nvidia cannot afford any missteps at current valuations. Everything from the numbers to guidance should be perfect to keep the rally going,” Ozkardeskaya said.
Results from Dell Technologies (NYSE: DELL), Salesforce (NYSE: CRM), Dollar General (NYSE: DG), and Gap (NYSE: GAP) are also awaited throughout the week.
Comments from San Francisco Fed President Mary Daly, a Federal Open Market Committee voting member this year, are due later in the day.
With the geopolitical tensions in the Middle East in the spotlight, crude prices climbed over 1%.
Among others, U.S.-listed shares of China’s PDD Holdings (NASDAQ: PDD) sank 14.9% after the Temu-owner missed market expectations for second-quarter revenue.
BJ’s Wholesale Club (NYSE: BJ) rose 1.0% after brokerage J.P.Morgan lifted its rating on the club operator to “neutral” from “underweight”.
B Riley Financial (NASDAQ: RILY) dropped 1.9% after the lender announced a notification of delinquency with the Nasdaq.
(Source: ReutersReuters)
