On Thursday, U.S. stock index futures showed a slight decline, reflecting ongoing concerns among investors following a surge in Treasury yields and a sharp sell-off on Wall Street. This sell-off was prompted by a higher-than-expected inflation report, which dampened hopes for an imminent rate cut by the Federal Reserve. Market participants now speculate that any adjustments to interest rates might be delayed until September, leading to adjustments in forecasts by institutions like UBS Global Wealth Management.
UBS now anticipates the Fed to initiate rate cuts in September, shifting from its previous projection of cuts in June. Traders are currently assigning a 41% probability to the first rate cut occurring in July, according to the CME FedWatch Tool. The yield on the 10-year Treasury note remained elevated, nearing its highest level since November, signaling ongoing concerns about inflation and monetary policy.
Investor focus shifted to upcoming economic data releases, particularly March’s producer prices data and weekly jobless claims, which will provide insights into the strength of the U.S. economy. Expectations for monetary policy easing in 2024 have tempered, with data from LSEG indicating a decrease in anticipated rate cuts from about 150 basis points at the beginning of the year to only 40 basis points currently.
Additionally, market participants awaited comments from key Federal Reserve officials, including New York Fed President John Williams, Richmond Fed President Thomas Barkin, and Atlanta Fed President Raphael Bostic, for indications on the central bank’s stance on interest rates.
The first-quarter earnings season is set to gain momentum, with major banks like JPMorgan Chase & Co, Citigroup, and Wells Fargo scheduled to report their quarterly results on Friday.
As of early morning, Dow e-minis were down 91 points, S&P 500 e-minis were down 12.75 points, and Nasdaq 100 e-minis were down 37.5 points.
In corporate news, biotech firm Alpine Immune Sciences announced its acquisition by Vertex Pharmaceuticals for approximately $4.9 billion in cash, causing Alpine’s stock to surge while Vertex’s stock declined. Clothing rental subscription service Rent the Runway saw a significant increase of 36.9% after providing a positive full-year forecast. Meanwhile, Albemarle, a lithium miner, experienced a 1.7% gain following an upgrade in its rating by Berenberg to “buy” from “hold.”