Nasdaq Index, Dow Jones, S&P 500 News: Stock Futures Rally as Hopes Surge for Fed Rate Cut

U.S. Stock Futures Rise Amid Hope for Fed Rate Cut

U.S. stock futures climbed on Monday, continuing the momentum from the previous session’s robust gains, buoyed by new job data renewing optimism for a Federal Reserve interest rate cut.

At 11:57 GMT, Dow Futures are trading 38953.00, up 121.00 or +0.31%. S&P 500 Index Futures are at 5172.75, up 18.00 or +0.35% and Nasdaq 100 Futures are trading 18047.25, up 46.50 or +0.26%.

Market Optimism Soars After Weak Jobs Data

The Dow Jones, S&P 500, and Nasdaq Composite surged over 1% each on Friday following the release of fresh nonfarm payrolls data for April. The report revealed a lower-than-expected addition of jobs to the U.S. economy and a rise in unemployment, alleviating concerns of an overheating economy. Traders interpreted the data as a potential catalyst for the Fed to initiate rate cuts sooner than anticipated.

Treasury Yields Decline on Labor Report

U.S. Treasury yields experienced a decline on Monday, extending the downturn observed on Friday post the release of the April jobs report. The report indicated weaker-than-projected growth in payrolls, with only 175,000 jobs added, falling short of the economists’ estimate of 240,000. Additionally, the unemployment rate rose to 3.9%, contrary to expectations of remaining steady at 3.8%. Wage growth also fell below expectations, as per the report. Lower yields are underpinning stocks on Monday.

Earnings Resilience and Expectations

Earnings resilience in the first quarter, supported by margins, has provided a buffer for equities despite some misses. Warren Buffett’s Berkshire Hathaway reported a remarkable 40% surge in year-over-year operating earnings for Q1. With the first-quarter earnings season reaching its peak, investors eagerly anticipate reports from key companies, including Disney and Uber.

Economic Outlook and Fed Speakers

The recent job data has sparked optimism regarding a potential soft landing for the U.S. economy. Investors eagerly await further insights on future Fed actions, with speeches scheduled from Richmond Fed President Tom Barkin and New York Fed President John Williams on Monday.

Short-Term Forecast:

Amidst growing uncertainty surrounding the number and timing of potential rate cuts, Friday’s weak labor report may prompt the Federal Reserve to expedite rate cuts. This is giving investors a bullish outlook. Traders are likely to monitor Fed communications closely for clues on the central bank’s monetary policy trends.

Technical Analysis

E-mini S&P 500 Index futures are trading higher shortly before the cash market opening on Monday. The short-term trend is up. It changed on Friday, shifting momentum to the upside.

The move also put the index in a position to challenge the 50-day moving average at 5183.76. Look for sellers on the first test of this level, but don’t be surpised by an acceleration to the upside since this will change the intermediate trend to up.