US market futures flat as tech rally tools and Fed meeting approaches
With traders ruling out hopes of a near-term rate cut due to a series of strong inflation data, the market's attention is now focused on the Federal Reserve meeting later this week.
On Monday (April 29) evening, US stock index futures traded nearly flat, with the momentum in the technology sector appearing to wane as market optimism about a Federal Reserve rate cut diminished. Strong inflation data in a series led traders to discount much of the hope for a near-term rate cut, with the focus now shifting to the Fed meeting later this week for fresh policy guidance.
Despite gains in Wall Street indexes over the past three days, a decline is expected for April. As of 19:09 ET (23:09 GMT), S&P 500 index futures held steady at 5144.50 points, while Nasdaq 100 index futures remained unchanged at 17908.50 points. Dow Jones index futures edged down to 38543.00 points.
With the Fed meeting approaching, the likelihood of a rate cut has diminished. It's anticipated that Wall Street will trade in a range in the days leading up to this week's Fed meeting, with the central bank widely expected to hold rates steady. However, Fed Chairman Powell is expected to send hawkish signals about the rate trajectory, especially following a series of higher-than-expected inflation data.
The Chicago Mercantile Exchange suggests that the market has largely discounted expectations of swift rate cuts, with only a few traders expecting cuts in September or later. Rising long-term rates are unfavorable for stocks as they restrict liquidity by constraining speculation.
Wall Street is expected to see losses in April. On Monday, the S&P 500 index rose 0.3% to 5116.17 points, the Nasdaq Composite index rose 0.4% to 15983.08 points, and the Dow Jones Industrial Average rose 0.4% to 38386.09 points.
Tesla Inc. (NASDAQ: TSLA) is among the biggest winners in the S&P 500 and Nasdaq indexes, with its stock rising 15% after the electric vehicle maker announced progress in launching its full self-driving software in the Chinese market.
Despite strong earnings and regulatory developments in the IT sector driving recent gains in Wall Street indexes, a decline of 2.4% to 3.6% is anticipated for April. Some profit-taking has occurred after a strong rally in the stock market in the first quarter, especially as traders discounted hopes for rate cuts earlier this year. Earnings season for the first quarter and further rate guidance are expected to drive performance in the coming month.
On Tuesday, the first-quarter earnings season will continue, with some key consumer goods companies expected to report.
Amazon.com Inc. (NASDAQ: AMZN), The Coca-Cola Company (NYSE: KO), Starbucks Corporation (NASDAQ: SBUX), and Mondelez International Inc. (NASDAQ: MDLZ) all plan to report earnings, while Eli Lilly and Company (NYSE: LLY) and Advanced Micro Devices Inc. (NASDAQ: AMD) are also set to report later on Tuesday.
3M Company (NYSE: MMM) and PayPal Holdings Inc. (NASDAQ: PYPL) will also report earnings later on Tuesday.
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