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U.S. equity futures were mixed in early Monday trading, while the dollar jumped higher against its global peers, as investors headed into the final trading week of the month focused on the growth and inflation backdrop ahead of the third quarter earnings season
Stocks ended mixed on Friday, although all three benchmarks booked solid gains for the week, following the first Federal Reserve rate cut in more than four years and data suggesting ongoing resilience in the labor market and better-than-expected underlying growth prospects, including August retail sales.
The Fed’s 50 basis point reduction, which included forecasts for more cuts into the end of the year and beyond, has changed the interest rate picture for global risk assets and looks to extend the S&P 500’s recent run of gains, which has lifted the benchmark just under a 1% higher for the month, putting it on pace for a solid 4.5% quarterly gain.
That outlook could be tested this week, however, as more than a dozen Fed officials, including Chairman Jerome Powell, are set to make public comments this week and the Bureau of Economic Analysis publishes its August inflation report, the central bank’s preferred gauge, prior to the start of trading on Friday.
Markets are likely to key on remarks from Federal Reserve Chairman Jerome Powell later this week, as well as the August reading of the central bank’s preferred inflation gauge.
Andrew Harnik/Getty Images
Still, the CME Group’s FedWatch now suggests at least a 52% chance of another 50 basis point cut from the Fed when it meets in November, and bets on the December meeting peg the Fed Funds rate at between 4% and 4.52% by the end of the year.
Benchmark 2-year Treasury note yields were little-changed from Friday’s closing levels and were last marked at 3.568% heading into the start of the New York trading session, with 10-year paper trading at 3.739%.
The U.S. dollar index, however, was marked 0.34% higher against a basket of its global peers at 101.105 following the biggest one-day decline for the Euro since June, a move tied to a weaker-than-expected reading for private sector business activity in the world’s biggest economic bloc.
Related: Fed speak, tech earnings and PCE inflation will test Wall Street this week
On Wall Street, stocks are looking at a muted open heading into the Monday session, with futures contracts tied to the S&P 500 suggesting an 5 point opening bell gain and those linked to the Dow Jones Industrial Average priced for a 7 point dip following last week’s record high close.
The tech-focused Nasdaq, meanwhile, is priced for a modest 40 point gain thanks in part to premarket advances for Nvidia (NVDA) , Tesla (TSLA) and Google (GOOGL) .
Intel INTC shares were the most active early mover, however, rising 3.5% to $22.56 each following a report from Bloomberg that the struggling chipmaker is looking to close a $5 billion investment from Apollo Global Management.
Other stocks on the move include Palantir Technologies (PLTR) , which will begin trading on the S&P 500 today alongside Dell Technologies (DELL) and Erie Indemnity (ERIE) following the benchmark’s regular quarter rebalancing.
American Airlines (AAL) , which is leaving the index, was marked 0.1% lower in premarket trading.
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In overseas markets, a soft reading for S&P Global’s PMI indices for the month of September, which track private sector activity around the region, pushed bets on a European Central Bank rate cut, helping the Stoxx 600 benchmark rise 0.14% in early Frankfurt trading.
Overnight in Asia, a 10 basis point reduction in a key China lending rate, the central bank’s 14-day repo rate, gave domestic stocks a modest boost, with the regional MSCI ex-Japan benchmark rising 0.15% into the close of trading.
Japan’s Nikkei 225, meanwhile, was closed for the country’s Autumnal Equinox observances.
Related: Veteran fund manager sees world of pain coming for stocks
