S&P 500 and Nasdaq 100 Rebound: Tech Stocks Lead Gains Amid Rate Cut Expectations

Stock Futures Show Resilience After Major Rebound

Stock futures saw a steady-to-positive movement on Tuesday, following a strong rebound from last week’s declines. On Monday, major U.S. indices rallied after enduring their worst week of the year.

Investors took the opportunity to buy the dip on Monday, driving the S&P 500 up 1.16%, the Nasdaq Composite up 1.16% as well, with Nvidia leading the gains, and the Dow Jones climbing 484 points, or 1.2%. These gains were partly fueled by growing expectations of an interest rate cut from the Federal Reserve during its upcoming meeting on September 17-18, aimed at addressing concerns of a slowing economy.

At 12:51 GMT, Dow futures are trading 40898.00, up 16.00 or +0.04%. S&P 500 Index futures are at 5493.25, up 13.75 or +0.25% and Nasdaq futures are trading 18753.00, up 60.75 or +0.33%.

Corporate Movers in Focus

Several notable stocks led the charge in premarket trading. Oracle jumped 8% after reporting fiscal first-quarter earnings that exceeded expectations. The cloud infrastructure giant also announced a strategic partnership with Amazon Web Services (AWS) to offer database services.

Meanwhile, avocado producer Mission Produce surged 21.6% after reporting a 24% increase in third-quarter revenue compared to the previous year. Rival Calavo Growers also posted gains, up 6.5% after doubling its dividend and beating analyst earnings estimates.

On the downside, Hewlett Packard Enterprise saw its shares drop over 5% due to plans to raise $1.35 billion through a preferred stock offering to fund its acquisition of Juniper Networks. Similarly, Apple shares slipped nearly 1% after the European Union’s top court ordered the company to pay $13 billion in back taxes.

Southwest Airlines and Goldman Sachs Struggle

Southwest Airlines is facing operational and financial challenges as it deals with higher costs, oversupply in the domestic market, and delays in aircraft deliveries from Boeing. The company has been under pressure from activist investor Elliott Investment Management, which recently pushed for leadership changes. Southwest announced plans to revamp its board of directors and introduce new initiatives such as offering more legroom on flights and introducing overnight services to bolster revenue. These changes come as the airline seeks to navigate rising competition and operational inefficiencies.

Meanwhile, Goldman Sachs is set to take a $400 million pre-tax hit to its third-quarter results as it continues to unwind its struggling consumer business. The bank’s venture into consumer lending, including its partnerships with the Apple Card and GM Card, has resulted in significant losses and regulatory friction. Goldman is now focusing on its core asset and wealth management divisions as it pivots away from consumer operations.

Key Economic Reports Ahead

Investors are closely watching the release of key economic data this week, with the consumer price index (CPI) set to be released on Wednesday, followed by the producer price index (PPI) on Thursday. These reports will be crucial in shaping market expectations ahead of the Fed’s September meeting. Treasury yields saw slight gains early Tuesday, with the 10-year Treasury yield rising 2 basis points to 3.719%, while the 2-year Treasury yield increased to 3.689%. These yields have stabilized after last week’s sharp declines following weak labor market data.

Market Forecast

As investors await inflation data and the Fed’s interest rate decision, markets are expected to remain cautious. With September historically a weak month for equities and uncertainties surrounding the U.S. presidential election, traders should anticipate short-term volatility.

Should the Fed opt for a more aggressive rate cut, markets could see a boost, though concerns over potential overreaction persist. Overall, the outlook remains neutral to slightly bearish until more clarity emerges from economic reports and Fed policy actions.

Technically, the key support is a price cluster formed by a pair of pivots at 5420.50 – 5395.00. The upside target and resistance is a price cluster formed by a pivot at 5532.00 and the 50-day moving average at 5538.49.

Traders can sit inside the 5394.00 to 5538.50 range until traders get clarity from the CPI report on Wednesday or next week’s Fed decision on September 18.