Nasdaq Index, Dow Jones, S&P 500 News: U.S. Stock Futures Rise as Dow Closes Above 40,000

U.S. Stock Futures Rise as Dow Hits Record High

U.S. stock futures are ticking higher on Monday after the Dow Jones Industrial Average closed above the key 40,000 level for the first time. The Dow first breached this milestone during Thursday’s session but posted its first close above the threshold on Friday, adding 134.21 points, or 0.3%, to end at 40,003.59.

At 11:17 GMT, Dow futures are trading 40159.00, up 22.00 or +0.05%. S&P 500 Index futures are at 5334.25, up 7.00 or +0.13% and Nasdaq 100 futures are trading 18675.75, up 40.50 or +0.22%.

Fed Officials Reassert Hawkish Tone

Recent hot CPI prints in the first quarter of 2024 have led to heightened inflation uncertainty, prompting Fed officials to reassert a hawkish tone. In the second half of 2023, falling inflation encouraged a more neutral stance, as indicated by J.P. Morgan’s Fed Hawk-Dove Speech Score. However, the renewed inflation concerns have shifted sentiment back towards tightening.

Economic Data Presents Mixed Signals

The Producer Price Index (PPI) rose by an unexpectedly strong 0.5% month-over-month in April, though Chair Powell considered the report mixed due to downward revisions of previous months. The April CPI report showed a slight slowdown in both headline and core inflation, rising 3.4% and 3.6% year-over-year, respectively. While this ended a streak of upside surprises, import prices increased by 1.1% year-over-year, suggesting fading disinflationary pressures from imported goods.

Powell’s Cautious Optimism

Fed Chair Jerome Powell commented last week that recent data had hurt his confidence, though his base case still calls for falling inflation and a prolonged pause in rate hikes. Despite sticky inflation warranting a hawkish tilt, the broader downtrend in inflation justifies a bias towards cuts. If price pressures ease through the summer, policy easing could commence as early as September.

Key Earnings Reports This Week

Toll Brothers will release its fiscal second-quarter earnings on Tuesday. Analysts expect a 45.3% year-over-year increase in earnings to $4.14 per share, with revenue remaining flat at $2.5 billion. Target’s first-quarter results are due Wednesday, with analysts forecasting flat earnings at $2.05 per share and a 1.6% decline in revenue to $24.5 billion. Nvidia’s earnings report, also on Wednesday, is highly anticipated, with expectations of earnings at $5.57 per share and a revenue surge to $24.6 billion from $6.5 billion a year ago.

Market Forecast

The market outlook remains cautiously optimistic. Technology stocks, especially those involved in AI, are expected to lead gains, driven by events like the Microsoft Build event and Nvidia’s earnings report.

Continued interest in AI and related spending is likely to support broader market advances. Traders will closely monitor inflation trends and Fed policy for further direction, but the current combination of market performance and economic signals points towards a bullish outlook in the near term.

Technical Analysis

E-mini Nasdaq 100 Index futures are edging higher on Monday after a two-day setback. Last Tuesday, the tech heavy index hit a record high at 18686.75. A trade through this level will reaffirm the uptrend. There is no target at this time.

On the downside, we could see some minor pressure if 18545.00 fails to hold. If this leads to increased pressure then it will put the 50-day moving average at 18145.68 on the radar. This indicator is controlling the intermediate trend.