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Markets lauded 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 week, as equities continued to pare losses from the
early August market rout.
Traders are now betting on a 25-basis-point or 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.
Attention will turn to Friday's July Personal Consumption
Expenditure data, the central bank's preferred inflation gauge.
At 05:28 a.m., Dow E-minis were up 15 points, or 0.04%, S&P 500
E-minis were up 9.25 points, or 0.16%, and Nasdaq 100 E-minis
were up 47.75 points, or 0.24%.
As earnings season draws to a close, chip designer Nvidia, 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.
Results from Dell, Salesforce, Dollar General and Gap are also
awaited through 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, BJ's Wholesale Club rose 1.4% after brokerage
J.P.Morgan lifted its rating on the club operator to "neutral"
from "underweight".
B Riley Financial dropped 1.8% after the lender announced a
notification of delinquency with the Nasdaq.
(Reporting by Johann M Cherian in Bengaluru; Editing by Pooja
Desai)
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