Nasdaq 100 and S&P500: Intel Weakens, Metsera Spikes 59% on Pfizer Deal, Fed in Spotlight

Stock Futures Dip After Record Week as Fed Outlook Faces Scrutiny

U.S. stock index futures pulled back Monday morning, following a record-setting week for the Dow Jones Industrial Average and S&P 500. Dow futures declined by 152 points, or 0.3%, while S&P 500 and Nasdaq-100 futures were down 0.3% and 0.4% respectively, as traders assessed the Federal Reserve’s next policy move against a backdrop of rising equity valuations and persistent inflation concerns.

Are Traders Overpricing Fed Rate Cuts?

Investor expectations for rate cuts remain aggressive, with markets pricing in 50 basis points of easing before year-end. However, Morgan Stanley’s Mike Wilson argues the Fed may not follow through, citing signs of early-cycle economic recovery and resilient earnings growth. Wilson believes the Fed’s dual mandate—still-strong labor markets and inflation above target—doesn’t support aggressive policy easing, raising the risk of a correction if market assumptions misalign with Fed action.

The market has become increasingly sensitive to real yields, with bad economic data often translating into equity rallies. But if the Fed recognizes economic strength and eases less than expected, that could stall a rotation into small caps and lower-quality names.

Liquidity Risks on the Horizon?

Wilson also warns of potential liquidity stress as the Fed continues quantitative tightening and the Treasury issues a high volume of bonds. Traders should monitor the spread between the Secured Overnight Financing Rate and Fed Funds, along with the MOVE index—currently at 72.5—as early indicators of Treasury market tension. A spike in either could signal tightening financial conditions, with implications for equity valuations.

Metsera, Apple, and Tesla Lead Pre-Market Movers

Metsera (MTSR) jumped 59% in pre-market trading after Pfizer (PFE) announced a $4.9 billion acquisition to expand into the weight-loss drug space. Pfizer shares rose nearly 3% on the news.

Apple (AAPL) and Palantir (PLTR) also saw strong early gains, up 3.2% and 3.1%, respectively.

Tesla (TSLA) added 2.2%, while Intel (INTC) fell over 3% following a broader semiconductor pullback.

Volkswagen (VOW3) plunged 7.9% after warning of a €5.1 billion hit to operating profits due to EV production delays at Porsche.

Can Economic Data Sustain Market Momentum?

Markets rallied last week on the back of a Fed rate cut and strong tech earnings, with the S&P 500, Dow, and Nasdaq all posting fresh highs. However, traders are now focused on the upcoming personal consumption expenditures (PCE) index—the Fed’s preferred inflation gauge. A hotter-than-expected reading could challenge the rate cut narrative and rattle equity bulls.

Market Outlook

With equity indexes at record highs and the Fed’s path uncertain, traders should watch for signals of liquidity stress and inflation surprises. Upcoming Fed speeches and macro data—especially Friday’s PCE release—will be pivotal in determining whether the current rally has legs or if a correction is on deck.

More Information in our Economic Calendar.