Market Watch: Dow futures contract gained 30 points or 0.1%, while S&P 500 futures and Nasdaq 100 futures remained mostly unchanged.
U.S. stock futures remain cautious amid potential market-moving events, including the Federal Reserve’s interest rate forecast, which could be influenced by a May inflation reading.
Federal Reserve decision
The Federal Reserve is expected to maintain interest rates at a two-decade high of 5.25% to 5.5% on Wednesday, highlighting the central bank’s outlook for future borrowing costs. The Federal Open Market Committee will unveil their latest “dot plot” for 2024 and longer-term rates, with Fed Chair Jerome Powell also expected to make a statement.
CPI Data
The Labor Department’s consumer price index could impact the Fed’s policy projections. The core reading predicts May’s headline price growth matched the previous month’s pace, but slowed monthly. A hotter-than-expected report could moderate Fed rate reductions in 2024, while a soft reading may lead to two cuts.
Chinese consumer prices
Chinese consumer prices grew less than expected in May due to a lull in consumption amid uncertain economic recovery. Producer prices shrank at a slower pace, marking the smallest contraction since February 2023, amid signs of a possible industrial sector rebound.
Economic Calendar
- 7:00 MBA Mortgage Applications
- 8:30 Consumer Price Index
- 10:30 EIA Petroleum Inventories
- 2:00 PM FOMC Announcement
- 2:00 PM Treasury Statement
- 2:30 PM Fed Chair Press Conference
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Recent data indicating a possible cooling in the U.S. economy have alleviated some persistent inflation concerns, fueling hopes that the Federal Reserve will start to bring interest rates down from more than two-decade highs as soon as September. Along with the Dow, the benchmark and tech-heavytouched record marks last week.
The durability of the strength on Wall Street will likely be tested by a fresh batch of corporate results this week, including quarterly returns from artificial intelligence darling Nvidia (see below). Durable goods and consumer sentiment data will also be in focus as markets hunt for more evidence that growth is moderating enough to give the Fed justification for rolling out rate cuts this year.
Recent data indicating a possible cooling in the U.S. economy have alleviated some persistent inflation concerns, fueling hopes that the Federal Reserve will start to bring interest rates down from more than two-decade highs as soon as September. Along with the Dow,
The durability of the strength on Wall Street will likely be tested by a fresh batch of corporate results this week, including quarterly returns from artificial intelligence darling Nvidia (see below). Durable goods and consumer sentiment data will also be in focus as markets hunt for more evidence that growth is moderating enough to give the Fed justification for rolling out rate cuts this year.
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MFitch Ratings has downgraded China’s credit rating outlook to “Negative” from “Stable” due to concerns over growing public debt and slowing growth in the world’s second-largest economy. The agency affirmed China’s rating at A+, citing increasing risks to China’s public finance outlook. Concerns over slowing economic growth have grown in recent months, with Fitch expecting gross domestic product growth to fall to 4.5% in 2024.
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U.S. inflation data for February is expected to provide insights into the future direction of Federal Reserve monetary policy. The overall consumer price index (CPI) is expected to match the previous month’s pace of 3.1% annually, with the core CPI expected to slow to 3.7% from 3.9% in January. However, the month-on-month gauge is expected to shed light on price gains momentum.
Fed officials have made cooling inflation the main objective of interest rate hikes, which have brought borrowing costs to over two-decade highs. They suggest cuts may be coming later this year, but need more evidence that price growth is sustainablely easing back down to their 2% annualized target. Analysts at ING believe inflation is likely too hot for comfort.
U.S. inflation data for February is expected to provide insights into the future direction of Federal Reserve monetary policy. The overall consumer price index (CPI) is expected to match the previous month’s pace of 3.1% annually, with the core CPI expected to slow to 3.7% from 3.9% in January. However, the month-on-month gauge is expected to shed light on price gains momentum.
Fed officials have made cooling inflation the main objective of interest rate hikes, which have brought borrowing costs to over two-decade highs. They suggest cuts may be coming later this year, but need more evidence that price growth is sustainablely easing back down to their 2% annualized target. Analysts at ING believe inflation is likely too hot for comfort.