Futures edge up ahead of economic data
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[February 27, 2024] (Reuters)
- U.S. stock index futures were rangebound on Tuesday as investors
awaited a crucial inflation report and other economic data that would
shape expectations for interest rate cuts from the Federal Reserve and
test the recent rally in markets.
Market focus is back on the Fed's monetary policy path after a frenzy
around artificial intelligence (AI) in the previous week eclipsed
concerns about delayed rate cuts and pushed the S&P 500 and Dow Jones
industrials to new peaks.
The highlight for this week will be the release of January's personal
consumption expenditures price index (PCE)- the Fed's preferred
inflation gauge on Thursday.
If the PCE reading hints at sticky inflation, like recent data on
consumer and producer prices, it could impact Fed's monetary policy and
lead traders to further push back their bets on the timing of rate cuts
Reports on gross domestic product (GDP), jobless claims and
manufacturing activity, which are due this week, will offer further
clues on the timing of rate cuts.
"Favorable data – meaning resilient but not abnormally strong growth,
coupled with softening inflation, would allow the market bulls to surf
on the 'goldilocks' wave," said Ipek Ozkardeskaya, senior analyst at
Swissquote Bank, referring to the possibility of the Fed bringing
inflation down without hurting the economy.
"An uptick in inflation is not good news for the Fed doves, who already
dropped the expectation that the Fed would cut rates by March, and then
by May, and now they are trimming the June cut expectations."
Currently, 63% of traders expect the Fed to start cutting rates by June,
down from nearly 98% at the end of January, according to the CME Group's
FedWatch tool. Bets for a July rate cut stand at 83.6%.
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Traders work on the floor at the New York Stock Exchange (NYSE) in
New York City, U.S., February 23, 2024. REUTERS/Brendan McDermid/File
Later on Tuesday, investors will get data on durable goods followed
by a survey on consumer confidence in February from the Conference
Focus will also be on comments from some Fed policymakers, including
voting members Atlanta Fed President Raphael Bostic, New York Fed
chief John Williams and Fed Board Governor Christopher Waller, who
are scheduled to speak this week.
At 5:20 a.m. ET, Dow e-minis were up 2 points, or 0.01%, S&P 500
e-minis were up 4.25 points, or 0.08%, and Nasdaq 100 e-minis were
up 34.75 points, or 0.19%.
Tesla outperformed megacap peers, rising 1.5% in premarket trading,
while Micron Technology, a beneficiary of the AI rally, climbed 2.6%
after a 4% advance in the previous session.
Adding to the gains, Zoom Video Communications jumped 12.0% as the
video-conferencing provider posted better-than-expected quarterly
results on strong demand for its expanding product portfolio.
Among other stocks, Unity Software plunged 14.5% after the videogame
software provider forecast full-year revenue below estimates.
(Reporting by Amruta Khandekar; Editing by Shinjini Ganguli)
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