U.S. stock futures on Monday indicated Wall Street posted a fourth straight day of gains as traders awaited inflation data later in the week.
How stock index futures trade
-
S&P 500 Futures
ES00,
+0.47% rose 19 points, or 0.5%, to 4,086.25.
-
Dow Jones Industrial Average futures
YM00,
+0.26% gained 80 points, or 0.2%, to 32,345.
-
Nasdaq-100 futures
NQ00,
+0.40% rose 54 points, or 0.4%, to 12,724.25.
The major indexes snapped a streak of three consecutive weekly losses on Friday. Dow Jones industrial index
DJIA,
weekly gain of 2.7% while the S&P 500
SPX,
rose 3.7%, while the Nasdaq Composite
comp,
advanced by 4.1%.
What drives the markets
The positive mood of the last few days was preserved in the new session. The risk-on tone spread to currencies, where the dollar retreated further from recent highs.
The latest rally in stocks, with the S&P 500 up 4.1% since last Tuesday’s close, suggests that investors now appear comfortable with the prospect of a 75 basis point interest rate hike by the Federal Reserve after its September 21 meeting.
Among the bulls, there is also hope that the August US consumer price report, due on Tuesday, will show a negative reading from the previous month, helping to cement expectations that inflation has peaked and the Fed is unlikely to raise borrowing costs above 4 % currently. markets. Producer price data will be released on Wednesday.
“The recent market optimism can be explained by the hope of seeing a second month of softening in US inflation following this week’s CPI release,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank, in a morning note.
“If the data is soft enough or, ideally, softer than expected, stocks are likely to continue to rise this week. If, however, the data is not as soft as expected, or worse, if we see a higher number than last month, then last week’s gains in stocks are likely to return quickly,” Ozkardeskaya added.
Jonathan Krinsky, BTIG’s chief market technician, noted that technical factors have helped sentiment, but gains may prove short-lived given seasonal headwinds and unless the dollar and bond yields continue to retreat.
“The bears fumbled on the goal line trying to break below 3900 last week, but the game is not over. We see downside risk as we head into a seasonally weak second half of September. While the dollar and rates paused their gains, there was no reversal, and 10-year real rates actually closed at new 52-week highs,” Krinsky said.
The yield on 10-year US Treasuries
TMUBMUSD10Y,
fell 4.3 basis points to 3.276%, and the US dollar index ICE
dxy,
decreased by 0.8%.
