© Reuters.
Investing.com — U.S. stock futures pointed lower on Monday morning, as investors looked ahead to a busy week of corporate earnings and parsed through fresh commentary from Federal Reserve Chair Jerome Powell.
By 06:46 ET (11:46 GMT), the Dow Jones futures contract had slipped by 92 points or 0.2%, S&P 500 Futures had shed 10 points or 0.2%, and Nasdaq 100 Futures had lost 23 points or 0.1%.
The three major averages surged last week, marking their 13th week of gains in the past 14 weeks. This upturn was fueled by a stronger-than-anticipated U.S. jobs report for January and robust quarterly earnings from a string of tech giants, including Microsoft (NASDAQ:MSFT) and Facebook-owner Meta Platforms (NASDAQ:META).
Meta’s stock price, in particular, posted its largest-ever one-day jump of 20.3%, sending the social media firm’s market capitalization up to $1.2 trillion, according to Investing.com figures.
Heading into the new trading week, traders are assessing Fed Chair Jerome Powell’s interview with CBS’ “60 Minutes” that aired on Sunday. Powell told the news program that the resilient U.S. economy can give Fed officials more time to take a “prudent” approach to possible benchmark interest rate reductions.
Powell added that he would like to “see the data confirm” that inflation — the major focus of an aggressive series of Fed policy tightening that has pushed borrowing costs up to more than two-decade highs — is cooling back down to the central bank’s stated 2% in a “sustainable way.”
His comments underlined a cautious sentiment among policymakers, who are keen to avoid possibly reigniting price gains by slashing rates too quickly. Last week, the Fed held rates at a target range of 5.25% to 5.50%, and stressed that they will need to see more evidence of easing inflation before they start to roll out cuts.
But Powell said that the Fed will still need to be careful not to allow rates to stay elevated for too long and potentially upend broader activity. “We have to balance the risk of moving too soon…or too late,” he noted.
CME Group’s (NASDAQ:CME) closely-monitored Fed Watch Tool showed that there was now only a roughly 16% probability that the Fed will lower rates by 25 basis points at its next policy gathering in March. The chance had stood at around 64% at the beginning of last month, when predictions for an early spring cut were bolstered by a dovish Fed outlook in December.
The rate-sensitive 2-year U.S. Treasury yield and the benchmark 10-year yield, which typically move inversely to prices, were higher following Powell’s comments.
Caterpillar , McDonald’s kick off hectic earnings week
The staying power of the stock market rally will face a stern test when a stream of big-name U.S. companies unveil their latest quarterly results this week.
On Monday, Caterpillar (NYSE:CAT), the machinery manufacturer that is often viewed as a bellwether for the American industrial sector, posted fourth-quarter adjusted per-share profit that topped expectations, as higher prices helped offset a dip in sales volume. Shares in Caterpillar rose sharply in premarket U.S. dealmaking.
Meanwhile, McDonald’s (NYSE:MCD) has reported fourth-quarter comparable sales growth of 3.4%, missing Bloomberg consensus estimates of 4.79%.
Media firms will also be in focus in the coming days, with results ahead from the industry leaders like Walt Disney (NYSE:DIS), Fox, and Warner Music Group.
The spotlight will continue to shine on Big Tech after last week’s market-moving crop of reports from titans like Microsoft and Google-owner Alphabet (NASDAQ:GOOGL). Chinese e-commerce player Alibaba (NYSE:BABA), ride-sharing firm Uber (NYSE:UBER), and chip designer Arm Holdings (NASDAQ:ARM) are slated to report this week.
Hopes are high that the solid economic signals will be reflected in the corporate numbers. According to LSEG data cited by Reuters, S&P 500 earnings are seen climbing by almost 10% in 2024, accelerating from an increase of 3.6% last year.
Elsewhere, shares in Boeing (NYSE:BA) were lower in premarket U.S. trading on Monday, after the embattled planemaker warned that a fresh issue in some fuselages of its 737 jets could lead to the “near-term” delivery delays. Scrutiny over the safety of Boeing jets has been rising since a dangerous mid-air door plug breach on one of its 737 Max 9 planes operated by Alaska Airlines last month. In the wake of the incident, Boeing has not offered a forecast for its 2024 financial year, stating that it still has “much to prove” to win back the confidence of regulators and passengers.
Crude prices were volatile on Monday, with investors eyeing the delayed timing of possible Fed interest rate cuts and ongoing violence in Middle East.
By 06:47 ET, the U.S. crude futures contract was down 0.5% at $71.92 a barrel, while the Brent contract dropped 0.3% to $77.10 per barrel. Both of the benchmarks slipped at the end of last week due in part to the blockbuster U.S. jobs report, which pushed out expectations for rate reductions this year. In theory, an extended period of tighter financial conditions could weigh on demand in the world’s biggest oil consumer.
Analysts at ING said that expectations for a possible ceasefire between Israel and Hamas also contributed to some of Friday’s weakness. But they argued that a halt in hostilities “does not appear imminent.”
The ING analysts added that, despite further U.S. and U.K. attacks on Yemen-based Houthis over the weekend, oil supply “remains unaffected” and the crude market “is largely balanced” in the first quarter thanks in part to the OPEC producer group sitting on a large amount of spare capacity.
Oliver Gray contributed to this report.
Source: Investing.com
