S&P 500 futures pulled back marginally after touching multiple record highs in the previous week
Futures tracking Wall Street’s main indexes were mixed in muted trading on Monday as investors awaited fresh economic data and comments from Fed officials throughout the week for more clarity on monetary policy.
S&P 500 futures pulled back marginally after touching multiple record highs in the previous week, while the tech-heavy Nasdaq rose as megacaps including Apple, Microsoft and Nvidia added between 0.2% and 0.6% in premarket trading.
Some chip stocks also gained, with Broadcom and U.S.-listed shares of Taiwan Semiconductor Manufacturing Co up 3% each. Arm Holdings and Micron Technology added 1.6% each after price-target raises by brokerages.
The blue-chip Dow was alone among the three major indexes to post weekly declines on Friday, while the Nasdaq notched its fifth successive record closing high and posted gains of 3.2% for the week.
Some investors, however, are worried about the sustainability of the equity rally as megacap growth and technology stocks were behind most of Wall Street’s gains this year.
Goldman Sachs still raised its 2024 year-end target for the S&P 500 Index to 5,600 from 5,200 earlier, representing nearly a 3.1% upside to the index’s last close.
On the economic roster for the week is May retail sales data on Tuesday, with industrial production, housing starts and S&P flash PMI data among other key releases due later in the week.
Recent hawkish projections from the Fed have somewhat contrasted several data releases pointing to growing weakness in the economy. The central bank pared back its projections for three rate cuts this year to just one on Wednesday.
Minneapolis Fed President Neel Kashkari said one Fed rate cut in December was a “reasonable prediction” in an interview on Sunday.
However, market pricing still shows expectations of nearly two 25-bp cuts this year, as per LSEG data. The CME FedWatch tool shows easing is still seen beginning at the September meeting.
Chair Jerome Powell characterised the U.S. consumer as ‘solid’ and unless there is another downside surprise here, we cannot see market pricing of 1-1/2 Fed rate cuts this year moving substantially, analysts at ING stated in a note.
