On Monday evening, the trading atmosphere in the U.S. stock market remained relatively calm as investors awaited further guidance from Federal Reserve officials regarding the trajectory of interest rates. This anticipation stemmed from recent statements suggesting that the Fed might maintain its current interest rate levels in the near term. Wall Street had seen a positive trend over the past three days, primarily driven by a combination of less hawkish remarks from Fed officials and data indicating softer-than-expected growth in nonfarm payrolls. These factors led market participants to increase their expectations for a potential rate cut in September. According to the CME Fedwatch tool, traders were assigning a 48% probability to a 25 basis point reduction in interest rates by September.
In addition to the Fed-related developments, investors were focusing on the continuation of the first-quarter earnings season. Scheduled for Tuesday were earnings reports from prominent companies such as the media giant Walt Disney Company, as well as oil and gas majors Duke Energy Corporation and Occidental Petroleum Corporation. Futures contracts for the S&P 500 showed stability at 5,205.0 points, while Nasdaq 100 Futures experienced a slight dip to 18,184.75 points, and Dow Jones Futures remained unchanged at 38,991.0 points by 19:33 ET (23:33 GMT).
Turning to monetary policy and inflation concerns, Federal Reserve officials emphasized the importance of gaining greater confidence in the easing of inflationary pressures before considering any adjustments to interest rates. Richmond Fed President Thomas Barkin stated that the current monetary policy stance was sufficiently restrictive to eventually bring inflation back within the Fed’s 2% annual target. Echoing similar sentiments, New York Fed President John Williams noted that existing monetary conditions were adequate for addressing inflation concerns. These comments followed signals from a recent Fed meeting, with several more central bank officials scheduled to deliver speeches throughout the week.
Inflation remained a significant consideration for the Fed, particularly given that price pressures had exceeded expectations in the first quarter and remained above the Fed’s 2% annual target. Despite these concerns, Wall Street indexes continued their upward trajectory, marking three consecutive sessions of gains and recouping a substantial portion of the losses observed in April. The S&P 500 rose by 1% to 5,180.74 points, the NASDAQ Composite added 1.2%, closing at 16,349.25 points, and the Dow Jones Industrial Average climbed by 0.5%, reaching 38,852.27 points.
The Nasdaq Composite demonstrated particularly robust performance in recent sessions, driven by a series of strong earnings reports from technology companies. Despite trading approximately 200 points below a record high reached in late March, the index maintained its momentum as investors remained optimistic about the prospects for the technology sector.