S&P500 and Nasdaq 100: Stock Futures Rise as Fed Rate Cut Fuels Optimism

Stock Futures Rise as Interest Rate Cut Boosts Sentiment

U.S. stock futures edged higher Monday, building on last week’s rally driven by the Federal Reserve’s decision to cut interest rates by 50 basis points, its first in four years. The Dow Jones Industrial Average closed at a record high above 42,000, while the S&P 500 and Nasdaq gained over 1% for the week. Initial volatility following the rate announcement gave way to optimism, as investors saw the cut as a proactive move to support economic stability.

Technically speaking, all eyes are on the 50-day moving average at 5604.97 as support. The market is currently reasonably above this indicator so we’re not worried about it being overbought.

Key Sector Movements

Technology

Tech stocks saw notable gains. Intel rose 4% following reports of a potential $5 billion investment from Apollo Global Management, signaling confidence in its future despite a challenging year. Micron Technology also climbed over 1%, with analysts bullish on its upcoming earnings report, driven by strong demand for artificial intelligence.

Energy

Constellation Energy added 3% after Morgan Stanley raised its price target, citing growth potential tied to the company’s plans to restart the Three Mile Island nuclear plant, meeting power demands from major tech clients like Microsoft.

Consumer Discretionary
General Motors declined 2% as Bernstein downgraded the stock, citing rising U.S. inventories and struggles in international markets. The automaker continues to face challenges in navigating global supply chain issues.

Communications
Pinterest gained more than 2% after Deutsche Bank initiated coverage with a buy rating, highlighting strong revenue prospects as the platform grows its user base and engagement.

Fed’s Continued Influence

Following the rate cut, market analysts are watching the Federal Reserve’s next moves closely. Ronald Temple of Lazard highlighted the Fed’s willingness to step in to prevent further labor market weakening. Atlanta Fed President Raphael Bostic also supported the rate cut, hinting that more policy easing may be ahead if economic conditions warrant it.

Economic Reports in Focus

Monday’s economic data, particularly in the service and manufacturing sectors, will be closely monitored, along with speeches from key Fed officials. Insights from these reports may offer further clues on the Fed’s next steps in adjusting monetary policy.

Market Forecast

With the Fed’s proactive stance, the short-term outlook for equities remains bullish. Tech and energy sectors are poised to continue leading gains, though challenges in consumer discretionary stocks, particularly autos, could weigh on broader market performance. Traders should keep a close eye on economic data and earnings reports this week for further market cues.