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U.S. equity futures were mixed in early Monday trading, while the dollar extended gains against its global peers, as investors looked ahead to a weekly that will likely be dominated by Federal Reserve headlines as investors look for clarity on the central bank’s autumn rate path.
With stocks now trending firmly higher, and the S&P 500 just 2% from the all-time high it reached in July, investors are hoping that a September Fed rate cut will add further support to a market that has rallied hard since the turmoil of the so-called carry trade unwind that began on August 5.
Comments from Fed officials this week, as well as minutes from the central bank’s June meeting and Chairman Jerome Powell’s keynote address at the Jackson Hole symposium Friday will all combine to provide markets a clearer sense on the direction of interest rates heading into the final months of the year.
At present, the CME Group’s FedWatch suggests a 71.5% chance that the Fed will lower its benchmark lending rate by 25 basis points, to between 5% and 5.25%, when it meets next month in Washington. Traders are also pricing in at least two more rate cuts in November and December.
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Benchmark 10-year Treasury note yields were last marked 3 basis points lower from Friday’s close at 3.869% while 2-year notes were down 2 basis points to 4.049%.
The U.S. dollar index, which tracks the greenback against a basket of its global peers, was marked 0.23% lower at 102.227.
Fed commentary, as well as data tied to the economy’s broader growth prospects, are likely to take center stage this week as the second quarter earnings season draws to a close. Only a handful of bluechip reports are expected over the next five days, including Lowe’s (LOW) , Target (TGT) , Palo Alto Networks (PANW) and TJX (TJX) .
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With around 93% of the S&P 500 reporting so far this season, collective profits are set to rise 12.5% from the same period last year to $501.5 billion, topping early Street forecasts. Looking into the current quarter, LSEG data suggests a growth rate of around 5.8% and a share-weighted tally of $513.3 billion.
Heading into the start of the trading day on Wall Street, futures contracts tied to the S&P 500, which nudged into positive territory for the month last week, is priced for a modest 3 point opening bell decline.
The tech-focused Nasdaq, meanwhile, is set for a 30 point pullback while the Dow Jones Industrial Average is called 10 points higher after closing at 40,659.76 points on Friday.
Advanced Micro Devices (AMD) shares were a notable early mover, rising 2.8% to $152.67 each after the chipmaker and key Nvidia (NVDA) rival unveiled plans to buy privately-owned server maker ZT Systems for around $4.9 billion.
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In Europe, stocks were mixed as well, with Britain’s FTSE 100 slipping 0.13% in early London trading and the regional Stoxx 600 benchmark rising 0.27% in Frankfurt.
Overnight in Asia, a stronger yen a pullback in chip stocks dragged the Nikkei 225 1.77% lower on the session in Tokyo, with the regional MSCI ex-Japan benchmark rising 0.84% into the close of trading.
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