U.S. stock index futures slipped Monday, as a recent rally on Wall Street cooled in anticipation of more cues on inflation and the Federal Reserve later this week.
By 06:55 ET (10:55 GMT), the Dow Jones Futures was down 75 points, or 0.2%, S&P 500 Futures traded 13 points, or 0.3%, lower and Nasdaq 100 Futures dropped 72 points, or 0.4%.
Wall Street faces consolidation after strong rally Wall Street indexes surged to record highs last week, and are course for a fifth consecutive month of gains, after the Fed signaled it will cut interest rates at least thrice this year, while persistent hype over artificial intelligence also drove investors into heavyweight technology stocks, particularly Nvidia (NASDAQ:NVDA).
Analysts are now flagging some near-term consolidation as traders lock-in profits. That said, all three indexes still remained largely in sight of record highs hit last week, and were sitting on a 4% to 10% rise so far in the first quarter of 2024. Quarter-end repositioning may also spur some weakness on Wall Street.
PCE inflation, Fed speakers on tap this week Anticipation of more inflation data and signals from the Federal Reserve are also set to keep markets on edge.
Personal consumption expenditures data, which is the Fed’s preferred inflation gauge, is due this Friday, when the market is on holiday for Good Friday. Given that the Fed recently reiterated its stance that inflation will drive the path of interest rate cuts in 2024, markets were on guard ahead of the reading.
While U.S. inflation has fallen considerably in the past year amid high interest rates, it still remains well above the Fed’s 2% annual target - a trend that has remained a major point of contention for the central bank.
A slew of Fed officials are also due to speak this week, with rate-setting committee members Raphael Bostic and Mary Daly set to speak on Monday and Friday, respectively.
Fed Chair Jerome Powell is also set to speak during the week, after striking a somewhat dovish tone at a Fed meeting last week.
Traders now see a 75% chance of the Fed bringing in the first cut in June, according to the CME FedWatch tool, up from around 55% at the start of last week.
Crude rises on ceasefire doubts Oil prices rose Monday as the chances of a Gaza ceasefire dimmed, adding to concerns of tightening global supply conditions.
By 06:55 ET, the U.S. crude futures traded 0.6% higher at $81.14 a barrel, while the Brent Oil Futures contract climbed 0.6% to $85.31 per barrel.
Both benchmarks fell around 1% last week, with a stronger U.S. dollar, which rose about 1% over the last week, keeping a lid on prices.
The United Nations Security Council will vote, later on Monday, on an alternative resolution for an immediate ceasefire in the Gaza strip for Ramadan, as well as the release of all hostages by Hamas.
However, this resolution was tabled almost immediately after China and Russia vetoed a U.S.-led resolution, leaving open the likelihood that U.S. officials retaliate with their veto this time.
A deescalation in the Israel-Hamas conflict would likely soothe concerns over geopolitical instability in the oil-rich Middle East region.
The prospect of tighter supplies put oil prices at four-month highs earlier in March, on the back of reduced Russian fuel output, following Ukrainian strikes on major refineries, as well as steadily shrinking U.S. inventories.
