Market Watch: Dow futures contract fell 22 points or 0.1%, while S&P 500 futures dropped 3 points or 0.1%, and Nasdaq 100 futures fell 15 points or 0.1%..
Wall Street may start lower as investors await inflation data, potential interest rate cuts, and the new earnings season, while the UK economy returns to growth.
US CPI
The US consumer inflation report is expected to show inflation easing and lead to September rate cuts.
The headline CPI is expected to slow to 3.1%, while core CPI remains steady at 0.2%.
Federal Reserve Chair Jerome Powell believes more data will support interest rate cuts.
Fed funds futures predict a 73% chance of easing at the September meeting.
US quarterly earnings season begins
The US quarterly earnings season begins on Friday with results from major banking institutions, including PepsiCo and Delta Air Lines. Strong results in the previous quarter have set high expectations for earnings and revenues.
Goldman Sachs predicts that S&P 500 firms will surpass consensus estimates, marking the most significant growth since Q1 2022.
However, the magnitude of earnings beats is expected to decrease as consensus forecasts set higher expectations. The S&P 500 has rallied 16% in 2024, driven by emerging AI technology.
UK economy Grows
The UK economy experienced healthy growth in May, with a 0.4% monthly increase in GDP.
The economy expanded by 0.9% over the three months to May, the strongest since January 2022.
This news is welcomed by Prime Minister Keir Starmer’s government as the economy recovers from a recession.
Economic Calendar
- 08:30 AM Consumer Price Index
- 08:30 AM Initial Jobless Claims
- 10:30 AM EIA Natural Gas Inventory
- 11:30 AM Fed’s Bostic Speech
- 01:00 PM Fed’s Musalem Speech
- 01:00 PM Results of $22B, 30-Year Bond Auction
- 02:00 PM Treasury Statement
- 04:30 PM Fed Balance Sheet
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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.