US Futures Surge as Investors Monitor Federal Reserve for Rate Cut Hints

US Futures Surge as Investors Monitor Federal Reserve for Rate Cut Hints
  • US stock futures climbed on Monday as Wall Street looked to the Fed’s next policy meeting.
  • The Fed might pare its projected rate cuts this year from three to two due to stubborn inflation.
  • Apple is reportedly in talks with Google about integrating its Gemini AI engine into the iPhone.

US stocks were poised to open higher on Monday as investors looked forward to the Federal Reserve’s policy meeting this week.

Futures linked to the S&P 500 were up 0.3% shortly after 5:45 a.m. ET. Nasdaq 100 futures were up a solid 0.6%, while Dow Jones Industrial Average futures were flat.

The benchmark 10-year Treasury yield was virtually unchanged at 4.31% — up significantly from 4.08% on March 8 as bond traders braced for stubborn inflation and solid economic growth to mean interest rates remain higher for longer.

The US Dollar Index, which tracks the buck against a basket of world currencies, was steady at 103.4 points. It has retreated from about 105 points in mid-February, but has still advanced this year after dropping below 101 points at the end of December.

The Fed is expected to keep its benchmark interest rate between 5.25% and 5.5%, up from almost zero in early 2022. The US central bank will also update its “dot plot,” which shows the range of its members’ projections for interest rates.

“The Fed members walk into this week’s meeting having seen a two-month jump in inflation, healthy jobs data, above-average economic growth, and robust corporate earnings,” Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, said in a morning note.

“There is a chance that the Fed members plot fewer rate cuts for this year and we see the median expectation fall to 2 rate cuts, from 3 plotted in December,” she continued. “If that’s the case, I would expect the US yields and the dollar to extend gains and the mood in equities to sour.”

Wall Street’s hopes for rapid rate cuts took a blow last week after new data showed consumer and producer prices rose faster than expected in February.

Lower rates promise to relieve pressure on cash-strapped consumers and embattled industries like regional banking and commercial real estate, slash the chances of a recession, and also boost the relative appeal of stocks and other risky assets by reducing the yields offered by haven assets like Treasury bonds.

Separately, Bloomberg reported that Apple is speaking to Alphabet about potentially building Google’s Gemini AI engine into the iPhone, representing a big step toward the nascent technology going mainstream.

Companies set to report earnings later include Cosan and StoneCo. Economists will be looking out for the release of homebuilder confidence data for February.

Source Reference

Latest stories