NASDAQ 100, Dow Jones, S&P 500: Optimism Grows as Indices Continue Uptrend

Highlights

• US stock index futures higher, signaling a positive start for Wall Street.
• Investors eagerly await inflation data and the Federal Reserve’s interest rate decision.
• Market sentiment suggests interest rates will remain stable.

Overview

The major US stock index futures are higher on Monday, shortly after the cash market opening. This marks a positive start to the week for Wall Street. Investors are eagerly awaiting the release of inflation data and the Federal Reserve’s interest rate decision, both scheduled for later this week. The U.S. Labor Department’s consumer price index reading on Tuesday, coinciding with the first day of the Fed’s meeting, is expected to show a slight cooling in inflation for May, although core prices are likely to remain elevated.

At 13:38 GMT, the blue chip Dow is trading 33932.13, up 55.35 or +0.16. The benchmark S&P 500 is at 4306.57, up 7.71 or +0.18% and the tech-driven NASDAQ is trading 13307.22, up 48.08 or +0.36%.

Traders Monitor Fed for Stable Rates

Traders are closely monitoring the Fed’s actions, with expectations that interest rates will be held steady in the 5%-5.25% range. According to the CME Fedwatch tool, there is a 79% chance of no rate hike this week, but there is a 53% probability of a 25-basis-point increase in July. The central bank is delicately balancing the need to avoid tightening too much, which could lead to a recession, and the need to prevent inflation from remaining high. Until there is sustained low or declining inflation, the headline number is likely to stay above the Fed’s 2% target. The market sentiment suggests that interest rates will remain stable.

S&P 500 Surge Indicates Bullish Trend

The S&P 500, a key benchmark index, has been on a positive trajectory, recording gains for four consecutive weeks. The index has risen by 20% since its lows in October 2022, signaling the beginning of a new bull market, as defined by some market participants. This rally has been fueled by the performance of megacap stocks, better-than-expected quarterly earnings, and optimism that the Fed may be nearing the end of its tightening cycle.

Stocks Making Notable Moves: Biogen, Adobe, Oracle, Nio

In the early session, several stocks have been making notable moves. Biogen shares rose 1.5% in premarket trading after receiving unanimous backing from a U.S. FDA panel for its Alzheimer’s drug, Leqembi. Adobe shares also gained 1.8% following an increased price target by Jefferies. Additionally, Oracle saw a 4.0% rise as J.P. Morgan raised its price target ahead of the company’s fourth-quarter results. U.S.-listed shares of Nio added 4.5% after the Chinese EV maker reduced prices to boost sales. However, Nasdaq Inc slid 9.3% after announcing its acquisition of software firm Adenza for $10.5 billion.

Fed Focus on Inflation, S&P 500 Nears Record

Looking ahead in the short term, the market’s expectation is that the Fed will emphasize its commitment to controlling inflation. Traders anticipate a pause in rate hikes for June and possibly July, which could provide a favorable environment for certain groups of stocks. The S&P 500 is nearing the 4,300 level, and if it breaks through with conviction, it could reach a new one-year high. Tech stocks like Oracle and AMD have been leading the early gains in premarket trading.