S&P500 Gains: Dell and Palantir Stocks Rally Following Benchmark Inclusion

U.S. Stock Futures Rebound After Last Week’s Heavy Losses

U.S. stock futures rallied Monday morning as Wall Street aimed to recover from the sharp losses experienced in the first trading week of September. Futures tied to major indexes reflected this positive shift, with S&P 500 futures up 0.68%, Nasdaq 100 futures gaining 0.79%, and Dow Jones Industrial Average futures climbing 279 points, or 0.69%.

The rebound is attributed to modest dip buying, with traders citing oversold market conditions and anticipation of future monetary support as key factors driving the uptick.

Despite Monday’s bounce, the market remains cautious after last week’s sell-off. The S&P 500 plunged 4.3% in its worst week since March 2023, while the Nasdaq Composite tumbled 5.8%, marking its weakest performance since 2022. The Dow also lost 2.9%.

These declines followed a disappointing jobs report, which revealed that nonfarm payrolls grew by only 142,000 in August, missing economists’ expectations of 161,000. However, the unemployment rate dipped to 4.2%, aligning with projections.

Key Inflation Reports on the Horizon

Investors are now shifting their focus to key inflation data scheduled for release later this week. August’s Consumer Price Index (CPI) will be announced Wednesday, followed by the Producer Price Index (PPI) on Thursday. These reports are expected to provide critical insights into the Federal Reserve’s upcoming monetary policy decisions.

According to the CME Group’s FedWatch Tool, markets are pricing in a 71% chance of a 25-basis-point rate cut at the Fed’s next meeting, with a 29% probability of a more aggressive 50-basis-point cut. The data this week could influence the likelihood of further easing, particularly if inflation trends lower than expected.

Stocks in Focus Ahead of Market Open

Several individual stocks made notable moves in premarket trading. Boeing shares jumped 4% after the company reached a labor deal with factory workers, potentially avoiding a costly strike. MarineMax shares surged 6% following an upgrade from Citi, citing lower interest rate prospects.

Meanwhile, Palantir Technologies and Dell Technologies both gained 8% and 5%, respectively, as they prepare to join the S&P 500 index.

On the downside, Merck shares dipped 2% after competitor Summit Therapeutics announced favorable results for a lung cancer drug, which could challenge Merck’s Keytruda. Arm Holdings rose 3% after reports suggested Apple would use its AI chip technology in the upcoming iPhone 16.

Treasury Yields Edge Higher

In bond markets, Treasury yields inched upward on Monday. The yield on the 10-year Treasury note rose by 4 basis points to 3.753%, while the 2-year yield gained 5 basis points to 3.698%. These moves come as investors brace for fresh inflation data, which could further shape Fed policy and market expectations.

Market Forecast: Cautious Optimism

While Monday’s gains reflect a temporary recovery from oversold conditions, the market’s direction remains uncertain ahead of key economic data. If inflation comes in lower than expected, it could bolster hopes for more dovish Fed policies, potentially extending the rally. However, any signs of persistent inflationary pressure may reignite concerns, leading to renewed volatility. Traders should remain cautious, with a bullish outlook contingent on favorable CPI and PPI readings this week.

Technically, the benchmark index is straddling the short-term pivot at 5420.50. Today’s close will be determined by trader reaction to this pivot.

Near-term support is the 200-day moving average at 5257.43. Near-term resistance is the 50-day moving average at 5538.55.