Futures tread water ahead of retail sales data

[July 16, 2024]  (Reuters) - Wall Street futures were steady on Tuesday after the main U.S. indexes rallied in the previous session, as markets awaited retail sales numbers and a bevy of corporate earnings.

Equity markets jumped on Monday, with the Dow Jones Industrial Average notching a record closing high, as investors priced in higher chances of a Federal Reserve interest-rate cut in September and a second term for presidential candidate Donald Trump following an assassination attempt.

Futures tracking the economically sensitive small-cap Russell 2000 rose 0.9% as investors looked to continue moving away from the heavily weighted large tech companies that have driven most of Wall Street's rallies this year.

Attention now shifts to retail sales to assess how consumers in the United States have responded to persistent inflation. June retail sales are expected to fall 0.3% on a monthly basis, according to economists polled by Reuters. Core retail prices, however, are expected to remain unchanged.

"Macro policy still trumps US election uncertainty for now, as recent data confirms the disinflation trend," strategists at J.P.Morgan said in a note.

Markets took it as a dovish signal when Federal Reserve Chairman Jerome Powell said on Monday that the latest economic data "add(s) somewhat to confidence" that inflation was returning to the central bank's 2% target.

Traders now see interest rates falling by September, with a nearly 86% chance of a 25-basis-point reduction by that meeting, according to the CME's FedWatch.

Bank of America's global fund manager survey showed investors remained bullish in July, expecting U.S. interest rates to fall soon and support the economy. However, they now view geopolitics as the biggest risk to that scenario.

Although investors perceived a potential second presidential term for Trump as a positive sign for equities after he survived the shooting at his campaign rally on Saturday, the unease was palpable as Wall Street's "fear gauge" briefly touched its highest level in three weeks.

Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., July 3, 2024. REUTERS/Brendan McDermid/File photo

The former president formally selected Senator J.D. Vance as his running mate on Monday.

Corporate earnings from companies including Bank of America and Morgan Stanley are expected before the bell.Their shares rose 0.3% and 0.6%, respectively, in premarket trading.

At 5:31 a.m. ET, Dow e-minis were up 34 points, or 0.08%, S&P 500 e-minis were up 1.25 points, or 0.02%, and Nasdaq 100 e-minis were up 3.5 points, or 0.02%.

Among single movers, shares of Tinder owner Match jumped 8.3% after a report that activist investor Starboard has a stake of more than 6.5% in the company and was pushing for a possible sale if a turnaround wasn't successful.

Shares of companies linked to Donald Trump retreated after gaining sharply on Monday, with Trump Media & Technology Group losing 8.5% and video-sharing platform Rumble falling 1.4%.

Shares of electric-vehicle maker Tesla gained 1.6% after a report that CEO Elon Musk planned to commit around $45 million a month to a new pro-Trump super political action committee.

(Reporting by Lisa Mattackal in Bengaluru; Editing by Pooja Desai)

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