On Monday, U.S. stock index futures displayed a subdued tone following last week’s robust rally driven by artificial intelligence (AI), as investors refocused on the Federal Reserve’s monetary policy trajectory and awaited key economic reports, notably inflation data, scheduled for later in the week.
The optimism surrounding artificial intelligence received a significant boost from a strong forecast by heavyweight chip designer Nvidia in the prior week. This propelled Wall Street to new record highs, overshadowing concerns about a potential delay in the Fed’s easing cycle.
Last week, both the S&P 500 and the Dow Jones industrials achieved all-time highs, while the Nasdaq, known for its tech-heavy composition, approached its previous intraday peak set in November 2021.
With the conclusion of the fourth-quarter earnings season, investor attention has shifted back to forthcoming economic data, which will influence expectations regarding the timing of U.S. interest rate adjustments.
Of particular importance is the release of January’s personal consumption expenditures price index (PCE) on Thursday, recognized as the Fed’s preferred inflation gauge. Any indication of sustained price pressures in the data could dampen the recent market rally, as traders have already delayed their projections for the first rate cut from May to June following hotter-than-expected readings on consumer and producer prices earlier this month.
“While a hot (PCE) print is likely to again question the last mile of the disinflation train, there is little scope for markets to price in any additional hawkishness,” noted Charu Chanana, head of FX strategy at Saxo Markets in a recent analysis.
Investors are also keeping a close eye on data regarding durable goods, consumer confidence, and manufacturing activity scheduled for release this week.
As of 5:22 a.m. ET, Dow e-minis were down 53 points, or 0.14%, S&P 500 e-minis were down 3.5 points, or 0.07%, and Nasdaq 100 e-minis were down 4.75 points, or 0.03%.
In premarket trading on Monday, megacap growth stocks displayed mixed performance, with Nvidia continuing to outperform with a 1.2% advance, following its achievement of reaching $2 trillion in market value for the first time on Friday.
Warren Buffett’s Berkshire Hathaway saw a 4.5% rise after the conglomerate posted its second consecutive record annual operating profit, buoyed by its insurance business.
However, shares of Moderna slipped 2.3% after HSBC downgraded the U.S. vaccine maker to “reduce” from “hold.”
Intuitive Machines experienced a significant decline of 34.5% after announcing that its spacecraft had tipped over shortly after landing on the lunar surface.