U.S. stock index futures took a momentary pause on Tuesday after a robust rally in the previous session. Investors, however, tempered expectations for an early initiation of rate cuts ahead of two crucial inflation reports anticipated later in the week.
Wall Street concluded Monday on a high note, witnessing the tech-focused Nasdaq surge over 2%, marking its best day since November 2023. Simultaneously, the benchmark S&P 500 approached its highest closing level from two years ago.
The market optimism stemmed from the resurgence of mega-cap growth stocks and semiconductor shares, with Nvidia closing at a record high after introducing new artificial intelligence (AI) components. Nvidia saw a 0.3% increase in early premarket trades.
Attention remains focused on two sets of December inflation reports scheduled for later this week, offering potential insights into the Federal Reserve’s monetary policy direction. Analysts particularly anticipate scrutiny around producer inflation figures following the recent downturn in crude oil prices.
UBS analysts emphasized, “We believe core inflation data still suggests the need for a somewhat restrictive monetary policy,” envisioning a scenario where growth slows just below trend, prompting the Fed to cut rates by 100 basis points starting in May.
Market observers, using the CME Group’s FedWatch tool, see a 58% probability of the central bank slashing interest rates by at least 25 basis points in March, down from nearly 64% in the previous session. Policymakers continue to resist expectations of an early easing cycle.
Atlanta Fed President Raphael Bostic, a voting member this year, suggested on Monday that an initial cut could come in the third quarter. Meanwhile, Fed Governor Michelle Bowman adjusted her hawkish stance and indicated a willingness to support eventual interest-rate cuts as inflation eases.
Investors will closely analyze Fed Vice Chair for Supervision Michael Barr’s remarks for insights into the central bank’s policy path.
Boeing experienced a 0.3% dip for the second consecutive day as the U.S. National Transportation Safety Board (NTSB) continued its investigation into a recent mishap, expressing uncertainty about the proper attachment of the recovered cabin panel to the fuselage.
Major carriers like United Airlines, Delta Air Lines, and American Airlines saw declines ranging from 0.7% to 1.0%.
As of 5:49 a.m. ET, Dow e-minis were down 116 points (0.31%), S&P 500 e-minis were down 14.75 points (0.31%), and Nasdaq 100 e-minis were down 73.5 points (0.44%).
Juniper Networks surged 22.6% after news broke that Hewlett Packard Enterprise was in talks to acquire the networking product maker in a $13-billion deal. However, Hewlett Packard saw an 8.6% decline following the announcement.
Netflix experienced a 2.0% drop after brokerage Citigroup downgraded the streaming platform from “buy” to “neutral.”
Unity Software rose 2.2% after the videogame software provider announced plans to lay off approximately 25% of its workforce.
