THE S&P 500 and the Nasdaq were on track for a higher open on Tuesday after a holiday-extended weekend, as investors awaited key inflation data later in the week that could influence expectations for the Federal Reserve’s policy trajectory.
The possibility that the world’s most influential central bank could kick off interest-rate cuts this year has sent Wall Street on a record-breaking rally since late 2023, with the tech-heavy Nasdaq and the benchmark S&P 500 notching their fifth straight week of gains on Friday.
However, expectations of when the first rate reduction could come have see-sawed as Fed policymakers continue to dismiss the imminent need for one, given data reflecting a still-resilient economy and sticky inflation.
Market attention now shifts to the U.S. core Personal Consumption Expenditures Price Index report for April, due later in the week. The Fed’s preferred inflation barometer is expected to hold steady on a monthly basis.
Traders see a 51.2% chance that the first rate cut of at-least 25 basis points could be delivered in September, according to the CME FedWatch Tool.
“The Fed is still in play… real interest rates need to come down. There’s a lot of sourness out there at the price of things like food and energy. Overall, inflation is trending down and slowing inflation will give the Fed cover to lower rates,” said Kim Forrest, chief investment officer at Bokeh Capital Partners.
U.S. trading moves to a shorter settlement on Tuesday, which regulators hope will reduce risk and improve efficiency in the world’s largest financial markets, but is expected to temporarily increase transaction failure for investors.
Among other data, the U.S. consumer confidence report for May is due at 10 a.m. ET, while the second estimate for first-quarter gross domestic product and the Fed’s Beige Book, along with remarks from a number of central bankers, are expected through the week.
Minneapolis Fed President Neel Kashkari said in an interview with CNBC broadcast that the U.S. central bank should wait before cutting interest rates, adding that it could potentially even hike rates if inflation fails to fall further.
At 8:35 a.m. ET, Dow e-minis were down 32 points, or 0.08%, S&P 500 e-minis were up 8 points, or 0.15%, and Nasdaq 100 e-minis were up 45.5 points, or 0.24%.
UBS Global Research raised its year-end target for the benchmark index to 5,600 from an earlier projection of 5,400, marking the highest forecast among major brokerages.
Nasdaq futures rose, led by a
3
% rise in AI darling Nvidia, after closing at a record high on Friday.
Apple jumped, up 1.7% after iPhone sales in China surged 52% in April from a year earlier, Reuters calculations based on industry data showed. Apple supplier Qualcomm also rose 2.9%.
Meme stock GameStop shot up 22% after the videogame retailer said late on Friday it had raised $933 million by selling 45 million shares, as part of an “at-the-market” offering.
Norwegian Cruise Line added 3.4% after brokerage Mizuho upgraded the stock to “buy” from “neutral”. – Reuters
