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U.S. equity futures nudged higher in early Thursday trading, while Treasury bond yields reversed earlier declines, as investors looked to a series of central bank rate cuts to assuage concerns over weakening growth prospects in major economies around the world.
Stocks ended higher on Wall Street yesterday, with a late rally in megacap tech names in a volatile trading lifting the Nasdaq nearly 370 points, or 2.17% on the session and the S&P 500 rising 1.07% by the close of trading.
A mixed reading of consumer price inflation, which showed stick core price pressures over the month of August even as the headline reading slowed to 2.5%, the lowest in three-and-a-half years, snuffed out bets on a big Fed rate hike and lifted Treasury bond yields into the close of the session.
The CME Group’s FedWatch puts the odds of a 50 basis point rate cut next week in Washington and just 13%, but is still pricing in at least a full percentage point of rate reductions between now and the end of the year.
Mixed CPI inflation data has snuffed out bets on a big Fed rate cut next week in Washington.
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Benchmark 2-year notes were last seen trading at 3.668% while 10-year paper was pegged at 3.678% heading into the Thursday trading block, with weekly jobless claims figures and factory gate inflation data due at 8:30 am Eastern time.
The Treasury will also auction $22 billion in new 30-year long bonds later in the session.
Investors will also be watching today’s European Central Bank rate decision in Frankfurt, where President Christine Lagarde and her colleagues are expected to lower the benchmark deposit rate by 25 basis points, to 3.5%, and signal further cuts to come as the world’s biggest economic bloc sputters and inflation pressures ease.
Related: CPI inflation report pumps the brakes on big Fed rate cut bets
Heading into the start of the trading day on Wall Street, futures contracts tied to the S&P 500, which remains down 1.67% for the month, are priced for an opening bell gain of around 7 points.
Futures tied to the Dow Jones Industrial Average, meanwhile, suggest a 48 point opening bell gain with the Nasdaq priced for a 30 point bump.
Tech soared today and is now back in first place YTD; Energy and Cons Staples fell most (former is doing much worse than latter YTD) … small caps lagged behind large caps (although Russell 1000 Value fell today) as NASDAQ outperformed pic.twitter.com/KDp7oVDDf2
— Liz Ann Sonders (@LizAnnSonders) September 11, 2024
Stocks on the move include Nvidia (NVDA) , which extended its recent run of gains with a 1% move in premarket following media reports that it could be cleared to sell high-end AI chips to Saudi Arabia.
U.S. oil prices bumped higher, with WTI crude futures for October delivery bouncing back from this week’s three-month low as Hurricane Francine made landfall off the coast of New Orleans carrying 75 mile per hour winds.
Related: Mortgage rates make a huge move as bonds surge
WTI futures were marked $1.24 higher at $68.55 per barrel as the storm threatens production facilities in the Gulf region, an area that includes around 39% of all U.S. oil and gas production.
In Europe, the regional Stoxx 600 benchmark rose 1.07% in early Frankfurt trading ahead of the ECB rate decision, with gains powered by tech stocks, while Britain’s FTSE 100 gain 0.84% in London.
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Overnight in Asia, the Nikkei 225 ended a seven-day losing streak with a solid 3.41% leap, with tech names powering the outsized advance and the yen falling below the 143 mark against the U.S. dollar.
The region-wide MSCI ex-Japan index, meanwhile, notched its best gain in nearly a month and was marked 1.62% higher into the close of trading.
Related: Veteran fund manager sees world of pain coming for stocks
