Earnings Season and Key Data Awaited
Oct 7 (ANP) – U.S. stock index futures edged lower on Monday as investors scaled back expectations for significant Federal Reserve rate cuts this year, ahead of key inflation data, policymakers’ speeches, and the start of the third-quarter earnings season later this week.
According to the CME’s FedWatch tool, investors are now pricing in over a 93% chance of a 25-basis-point rate cut at the Fed’s November meeting, down from last week’s hopes for a larger 50-basis-point cut. This shift comes after the robust September non-farm payrolls report on Friday, which revealed the economy added the highest number of jobs in six months, indicating a resilient labor market.
In response, U.S. Treasury yields surged, with the 10-year note yield hitting its highest level since early August. The rise in yields put pressure on rate-sensitive megacap growth stocks, with Nvidia (
) down 1.5%, Amazon.com (AMZN.O) down 2.1%, and Apple (AAPL.O) down 1.5% in premarket trading.
On the positive side, Pfizer shares rose 2.7% following reports that activist investor Starboard Value has taken a $1 billion stake in the pharmaceutical giant.
As of 5:31 a.m. ET, S&P 500 E-minis were down 32.75 points, or 0.56%, Nasdaq 100 E-minis fell 148 points, or 0.73%, and Dow E-minis slipped 197 points, or 0.46%.
Despite tempered expectations for rate cuts, many market analysts remain optimistic about the strength of the economy and the outlook for equities. Goldman Sachs raised its year-end 2024 S&P 500 target to 6,000 from 5,600 and lowered its forecast for a U.S. economic recession to 15% from 20%.
The benchmark S&P 500 closed Friday just above 5,751, while the Dow Jones Industrial Index hit a record high after the jobs report.
This week’s most anticipated data release is the Consumer Price Index (CPI) report, set for Thursday, which will offer further insight into inflation trends. In addition, several Federal Reserve officials, including Michelle Bowman, Neel Kashkari, Raphael Bostic, and Alberto Musalem, are expected to speak on Monday.
The third-quarter earnings season also kicks off this week, with major financial institutions like JP Morgan Chase, Wells Fargo, and BlackRock set to report on October 11. These earnings reports will provide a crucial test for Wall Street’s rally this year, as the S&P 500 is up about 20% year-to-date and hovers near record highs.
However, market risks persist, including escalating geopolitical tensions in the Middle East, which could influence investor sentiment moving forward.