On Tuesday, Futures tracking Wall Street’s main indexes rose as investors looked for bargains after a rout in the previous session, while dovish rate commentary from Federal Reserve officials also lifted the mood.
Most megacap and growth stocks, which together lost $200 billion in market value on Monday, gained in premarket trading with Nvidia (NASDAQ: NVDA) bouncing back 2.1%.
S&P 500 and the Nasdaq Composite posted losses of at least 3% each in the last session after weak economic data raised worries of a U.S. recession and the unwinding of sharp positions of carry trades that fund high-yielding assets.
U.S. central bank policymakers pushed back on Monday against the notion that weaker-than-expected July jobs data means the economy is in recessionary freefall but also warned that the Fed will need to cut rates to avoid such an outcome.
“Our view remains that household and corporate balance sheets’ strength implies recession is unlikely, but risks are building. If economic data continues to deteriorate, the Fed stands in a good position to respond aggressively,” said Seema Shah, chief global strategist at Principal Asset Management.
Meanwhile, traders see about a 79% chance of a 50-basis-point rate cut in September, down from 85% on Monday, and expect the year-end rates at 4.25%-4.50%, according to CME’s FedWatch Tool.
Top brokerages including J.P. Morgan, Citigroup, and Wells Fargo have forecast a 50-basis-point interest rate cut by the U.S. central bank in September after a surprisingly weak employment report for July.
A closely watched gap between the two- and 10-year benchmark yields turned positive on Monday, which typically indicates that the economy is heading into a downturn.
The CBOE Volatility index, also known as Wall Street’s “fear gauge”, was at 31.64 points after hitting a high of 65.73 on Monday.
At 06:45 a.m. ET, Dow E-minis were up 235 points, or 0.6%, S&P 500 E-minis were up 40 points, or 0.77% and Nasdaq 100 E-minis were up 135.5 points, or 0.75%.
Futures tied to the Russell 2000 small caps index also advanced 0.7%.
Among other movers, Palantir Technologies (NYSE: PLTR) surged 8.9% after the software services provider raised its annual revenue and profit forecast for the second time this year.
Caterpillar (NYSE: CAT) added 4.1% after reporting a rise in quarterly adjusted profit, lifted by resilient demand for its large excavators and other construction equipment on the back of increased infrastructure spending in the United States.
CrowdStrike (NASDAQ: CRWD) rose 3.4% after brokerage Piper Sandler raised its stock rating to “overweight” from “neutral”.
(Source: Reuters)
Maria Reed is a financial journalist with a passion for covering US equities. She joined the ABBO News team in June 2023. Maria holds an M.S. degree in International Economics and Finance from Otto-von-Guericke University in Magdeburg and is a CFA Level 2 candidate.
