U.S. stock futures indicated a slight decline on Monday as investors prepared for a week marked by two significant events: the Federal Reserve’s interest rate decision and crucial inflation data. Dow futures slipped by 87 points or 0.2%, S&P 500 futures dipped by 6 points or 0.1%, and Nasdaq 100 futures edged down by 43 points or 0.3% by 03:46 ET (07:46 GMT).
The previous trading session on Wall Street was characterized by choppy movements, resulting in a lower close. This decline was primarily driven by a jobs report that exceeded expectations, raising concerns that the Federal Reserve might postpone potential rate cuts for a longer duration than anticipated. However, despite Friday’s setbacks, the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average managed to post weekly gains.
The upcoming focus lies on the Federal Reserve’s interest rate decision scheduled for Wednesday. Market participants widely anticipate the central bank to maintain borrowing costs at more than two-decade highs. Attention will be on any signals provided by the Fed regarding its outlook for rates. The update to the Fed’s dot plot, which offers insights into policymakers’ rate expectations, is expected to show a reduction from three anticipated rate cuts to two for the year.
Simultaneously, fresh U.S. inflation data is set to be released shortly before the Fed’s decision. Economists predict that while annualized headline price growth in May might match the previous month’s pace, there could be a slight slowdown on a monthly basis. The core reading, which excludes volatile items like food and fuel, is anticipated to decelerate slightly year-on-year while remaining consistent with April’s rate month-on-month. These figures will provide valuable insights into the Fed’s potential policy direction later in the year.
In other market news, Elliott Investment Management reportedly acquired a nearly $2 billion stake in Southwest Airlines, aiming to drive improvements and reverse the carrier’s underperformance. This move comes as Southwest’s shares have declined by nearly 4% in 2024 and remain below their March 2020 levels due to the pandemic’s impact and other challenges.
Meanwhile, crude oil prices edged higher on Monday after three consecutive weeks of losses. Market participants are awaiting monthly reports from OPEC and the International Energy Agency (IEA), as well as the Federal Reserve’s meeting, for further cues. Despite recent losses, concerns persist regarding rising global supply, particularly amid OPEC+’s plan to unwind production cuts starting in October.