Stock-index futures edged lower Monday, pointing to a soft start for Wall Street, as investors scaled back expectations for rate cuts following last week’s strong June jobs report.
What are major indexes doing?
Futures on the Dow Jones Industrial Average YMU19, -0.20% were off 69 points, or 0.3%, at 26,819, while S&P 500 futures ESU19, -0.16% shed 6.65 points, or 0.2%, to 2,983.75. Nasdaq-100 futures NQU19, -0.34% declined 34.5 points, or 0.4%, to 7,817.50.
Need to Know: Weaker growth will offset a Fed rate cut — so sell stocks, warns Morgan Stanley
Stocks scored weekly gains in last week’s holiday-shortened action, with all three major indexes notching record closes on Wednesday. But stocks pulled back Friday to end slightly lower after a bigger-than-expected jump in June nonfarm payrolls saw traders scale back expectations for rate reductions.
The Dow DJIA, -0.16% ended 43.88 points lower on Friday, down 0.2%, at 26,922.12, while the S&P 500 SPX, -0.18% pulled back 0.2% to end at 2,990.41. The Nasdaq Composite COMP, -0.10% gave up 8.44 points, or 0.1%, to close at 8,161.79.
What’s driving the market?
Traders continue to look for the Federal Reserve to cut rates when policy makers meet at the end of the month, but fed-funds futures show investors cut bets for a 50 basis point reduction since Friday morning. Analysts said testimony before Congress by Fed Chairman Jerome Powell will likely be a big driver for stocks this week.
“Our economists continue to expect a rate cut by the U.S. Federal Reserve at the end of July, but all eyes will now be on Fed Chairman Jerome Powell on Wednesday,” said Patrik Lang, head of equity research at Julius Baer, in a note.
“With regard to equities, any macroeconomic data that eases concerns about an impending slowdown, in combination with a Fed that is not tightening and a steepening yield curve, are, in our view, providing a bullish backdrop for equities in general, especially for cyclicals,” he said
Read: A strong economy and Fed rate cuts: The stock market wants to ‘have its cake and eat it, too’
European equities SXXP, +0.04% were trading slightly lower as shares of German banking giant Deutsche DBK, -1.56% DBK, -1.46% fell 1.4% in Frankfurt, a day after announcing a sweeping restructuring that will see it shed 18,000 jobs by 2022 and drop its stock sales and trading unit as it exits investment banking activities.
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