U.S. stock futures inched higher on Monday as investors eagerly anticipated important inflation and employment data scheduled for release later in the week. This follows Federal Reserve Chairman Jerome Powell’s cautious outlook expressed last week.
How Are Stock-Index Futures Performing?
- S&P 500 futures (ES00) rose 4.25 points, or less than 0.1%, reaching 4,417
- Dow Jones Industrial Average futures (YM00) increased by 55 points, or 0.1%, reaching 34,432
- Nasdaq 100 futures (NQ00) saw a rise of 24.5 points, or 0.1%, reaching 15,004
Recap of Friday’s Activity
Stocks made a rebound on Friday, with the Dow industrials climbing 247.48 points, or 0.7%, as it closed at 34,346.90. The S&P 500 also witnessed a rise of 0.7% to finish at 4,405.71, while the Nasdaq Composite advanced by 0.9% and closed at 13,590.65.
According to Dow Jones Market Data, the Dow experienced a decrease of 0.4% for the week, while the S&P 500 climbed by 0.8% and the Nasdaq rose by 2.3%. These gains put an end to three consecutive weeks of losses for the latter two indices, while the Dow faced a second straight week of decline.
Market Drivers
Investors are poised to build upon Friday’s positive momentum following Powell’s statement that the impact of inflation and a robust U.S. economy remained uncertain. Powell emphasized the need for cautious monetary policy moving forward.
Allan von Mehren, the chief analyst at Dankse Bank, stated in a note to clients that Powell’s remarks had only a negligible impact on market sentiment. He added, “Those who believe in an early Fed pivot next year still have valid arguments, and vice versa. As a result, equities finally posted gains, particularly in the U.S. market.”
Powell’s Remarks and Investor Appetite
In recent remarks, Powell made sure to avoid saying anything that would discourage investor appetite for large cap growth stocks. As a result, consumer discretionary and tech sectors outperformed other sectors, while large cap stocks outperformed small cap stocks. Additionally, growth stocks were generally preferred over value stocks.
Focus on Economic Data
The central bank is closely monitoring upcoming data releases. The July personal consumption expenditure index, the bank’s preferred inflation measure, is scheduled for release on Thursday. This will be followed by the August payrolls data on Friday.
August Market Performance
As we near the end of August, the S&P 500 is currently down 3.9%. If this trend continues, it will be the index’s first monthly loss since February. The past few months have seen a cooling of tech stocks, resulting in a stall in the stock market rally we had seen earlier in 2023. The Nasdaq Composite is also on track for its first monthly loss since February, currently down over 5% for August.
Treasury Yields Soften
Meanwhile, Treasury yields for the 10-year note experienced slight softening, decreasing 1 basis point to 4.222%.
Stock Market Developments in China
In China, stocks saw an upward climb after the Finance Ministry and the country’s stock market regulator implemented measures to spark interest in stock trading. These measures include halving the tax on stock trades and limiting sales by major shareholders in companies that have not distributed sufficient dividends. As a result, China’s CSI 300 index climbed more than 1%. However, it is worth noting that shares of indebted property developer China Evergrande Group tumbled 78% in Hong Kong after more than a year of halted trading.