LDN - Business

Futures slip on rate-cut jitters ahead of inflation data, Fed meeting

[June 10, 2024] (Reuters) - U.S. stock index futures inched lower on Monday as investors were cautious ahead of key inflation data and a central bank policy meeting scheduled for this week.

Investors grappled with conflicting data last week, with indexes closing slightly lower on Friday after Nonfarm Payrolls data was much stronger than expected, but the unemployment rate ticked higher and household surveys showed signs of weakness.

Markets dialed back expectations for interest-rate cuts by the Federal Reserve in September after Friday's data, with pricing now reflecting a less-than-50% chance of a cut. Expectations had risen as high as 69% last week.

Interest-rate traders also trimmed expectations for the amount of easing this year, with pricing implying just one cut versus two prior to the payrolls data, according to LSEG data.

Despite the back-and-forth on rates, all three major indexes ended the last week higher, with the Nasdaq gaining 2.38%, the S&P 500 up 1.32%, and the Dow adding 0.29%.

Weekly gains were led by a nearly 4% rise in the S&P 500's information technology sector, which spearheaded recent Wall Street's rallies after stocks such as chipmaker Nvidia's, seen as a strong bet on artificial intelligence, soared.

Attention now turns to a packed week ahead. The Consumer Price Index inflation data for May and the conclusion of the Fed's two-day policy meeting are scheduled on Wednesday.

While the central bank is overwhelmingly expected to keep rates steady, investors will assess updated economic and policy projections for clues on the outlook for the rest of the year.

"The main focus will be their updated dot plot... with inflation having remained sticky and the latest jobs numbers beating all expectations, we expect them to push their projections for rate cuts back so they end up with two cuts in 2024 and four in 2025 instead of three and three," analysts at ING said in a note.

[to top of second column]

Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., May 15, 2024. REUTERS/Brendan McDermid

J.P.Morgan said in a client note on Friday it now expects the first rate cut occurring in November, rather than July as previously anticipated.

Producer Price Index data for May, import and export prices, as well as the first release of the University of Michigan's consumer sentiment survey are also due later in the week.

Nvidia's shares slipped 0.4% in premarket trading, in the wake of a 10-for-one stock split that went into effect after markets closed on Friday.

At 5:41 a.m. ET, Dow e-minis were down 108 points, or 0.28%, S&P 500 e-minis were down 11.75 points, or 0.22%, and Nasdaq 100 e-minis were down 36 points, or 0.19%.

Southwest Airlines shares jumped 7.0% after a report that activist investor Elliott Investment Management has built up a nearly $2 billion dollar position in the company.

Shares of CrowdStrike, KKR & Co and GoDaddy rose between 3.3% and 10.4% after S&P Dow Jones Indices said the companies would be included in the S&P 500 as of June 24, replacing Robert Half, Comerica and Illumina.

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

Back to top