(Reuters) – Ahead of key inflation data, comments from policymakers and the third-quarter earnings season that begins later this week, investors on Monday refrained from betting on the extent of the Federal Reserve’s interest rate cuts this year. US stock index futures fell.
According to CME’s FedWatch tool, investors are pricing in a more than 93% chance that the FOMC will cut rates by 25 basis points in November. Just a week ago, the market was pinning its hopes on a second major 50 basis point cut.
However, a strong September non-farm payrolls report released last Friday showed the economy unexpectedly added the most jobs in six months, pointing to a still robust job market. are.
Meanwhile, U.S. Treasury yields rose, with the benchmark 10-year Treasury yield reaching its highest level since early August.
Rising yields weighed on interest-sensitive large-cap growth stocks, with Nvidia down 1.5%, Amazon.com Inc. down 2.1% and Apple Inc. down 1.5% in premarket trading.
Among other moves, Pfizer shares rose 2.7% after reports that activist investor Starboard Value had acquired about $1 billion in stock in the pharmaceutical giant.
As of 5:31 a.m. ET, the U.S. S&P 500 E-mini was down 32.75 points or 0.56%, the Nasdaq 100 E-mini was down 148 points or 0.73% and the Dow E-mini was down 197 points or 0.46. % fell.
While markets continue to tweak expectations for rate cuts, most market watchers remain optimistic about the underlying strength of the economy and the outlook for stock prices.
Goldman Sachs raised its target for the S&P 500 index by the end of 2024 from 5,600 to 6,000, and also lowered the probability of a U.S. recession from 20% to 15%.
The benchmark S&P index ended Friday at just above 5,751, and the Dow Jones Industrial Average hit a closing high after the jobs report.
This week’s most closely watched consumer price index data is scheduled to be released on Thursday.
Several Fed officials are also scheduled to speak this week, with comments expected later Monday from Michelle Bowman, Neel Kashkari, Rafael Bostic and Alberto Moussalem.
Third-quarter earnings for S&P 500 companies begin this week, and major banks such as JPMorgan Chase, Wells Fargo and BlackRock are scheduled to report on October 11th.
Earnings will be a key test of Wall Street’s stock rally this year. The S&P 500 is up about 20% since the beginning of the year and is near all-time highs.
Other risks remain a concern, such as rising geopolitical tensions in the Middle East.
(Reporting by Lisa Matakkal in Bengaluru; Editing by Shinjini Ganguly)
