(Reuters) – US stock index futures rose on Wednesday as investors increased their bets on an earlier start to interest rate cuts by the Federal Reserve (the US central bank) this year than previously expected, after a series of economic data that indicated a slowdown in growth. Economic.
Wall Street ended Tuesday's session slightly higher, paring some losses, with interest rate-sensitive real estate stocks leading the sector's gains.
This followed initial losses after data showed US job openings in April fell to their lowest levels in more than three years, the latest economic report to indicate slowing growth in the world's largest economy. This gives the Fed more room to cut interest rates.
Markets are now pricing in about 44 basis points of easing this year. Additionally, expectations for a September rate cut are now around 65%, versus less than 50% last week, according to the Chicago Mercantile Exchange's FedWatch tool.
“The JOLTS report follows a string of weak economic data and points to a gradual slowdown in the US economy… Market participants are likely to welcome a cool economy and the prospect of monetary easing, given the overwhelming bullish outlook among investors.” BCA Research said in a note.
Signs of steady inflation and resilient economic growth had forced markets to lower hopes about the timing and pace of interest rate cuts at the start of the year, while many expected policy easing to begin as early as March.
Interest rate-sensitive mega stocks rose in pre-market trading, with shares of Nvidia (NASDAQ:), Microsoft (NASDAQ:) and Amazon.com (NASDAQ:) rising between 0.4% and 1.6%.
Investors are now awaiting the non-farm payrolls report, due on Friday, which will provide a more complete picture of the labor market. The ADP national employment report, as well as surveys on the services sector, are expected later on Wednesday.
At 5:57 a.m. ET, it was up 44 points, or 0.11%, up 10.5 points, or 0.20%, and up 82.5 points, or 0.44%.
Among individual movers, budget retailer Dollar Tree (NASDAQ:) rose 2.2% after a report that the company plans to explore options that include a potential sale or spin-off of Family Dollar.
Intel (NASDAQ:) stock rose 1.0% after buyout firm Apollo Global Management (NYSE:) agreed to buy a 49% ownership stake for $11 billion in a joint venture related to the chipmaker's Irish manufacturing unit.
CrowdStrike Holdings (NASDAQ:) stock jumped 7.4% after second-quarter revenue was forecast above estimates when markets closed on Tuesday, thanks to strong demand for its cybersecurity offerings.