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Strong gains in equities this year on signs of cooling inflation
have come under test in August, with the S&P 500 losing more
than 5% from its intra-day high in late July.
Fresh evidence of a robust U.S. economy last week yet again
stoked expectations that the Federal Reserve could keep rates
higher for longer, driving 10-year Treasury yield to its highest
level since October.
The yield on the 10-year note was up at 4.28% on Monday and a
breach above 4.338% would take it to levels not seen since 2007.
Investors are now keenly waiting for comments from Fed Chair
Jerome Powell on Friday at a meeting of central bankers at
Jackson Hole in Wyoming that begins on Aug. 24.
"The symposium will be key to assess Powell's dovishness meter.
If he raises concerns on the economic momentum or the rising
credit risks, that may prompt the markets to price in rate cuts
to start earlier," said Charu Chanana, a market strategist at
Saxo Markets in a note.
Traders' bets of a pause in rate hikes in September stood at
nearly 89%, according to the CME Group's Fedwatch tool.
All three main U.S. stock indexes posted declines last week, led
by the Nasdaq due to losses in major technology and growth
stocks.
On Monday, bruised growth stocks edged higher, with Tesla rising
2.8% in premarket trading.
Nvidia, which sharply outperformed its megacap peers with gains
of nearly 6% last week, climbed 2% as HSBC raised its price
target on the stock to $780, the second highest on Wall Street.
The chip designer's quarterly report on Wednesday will be a
major test for this year's stock market rally, which has been
fueled by optimism around the potential for artificial
intelligence.
At 5:27 a.m. ET, Dow e-minis were up 131 points, or 0.38%, S&P
500 e-minis were up 21.5 points, or 0.49%, and Nasdaq 100
e-minis were up 96.25 points, or 0.65%.
Shares of Palo Alto Networks jumped 12.5% in premarket trading
as the cybersecurity firm forecast annual billings above
expectations. Shares of its peer CrowdStrike Holdings also
gained 3.2%.
(Reporting by Amruta Khandekar; Editing by Arun Koyyur)
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