U.S. stock index futures were slightly lower in overnight trading on Sunday as investors looked ahead to Federal Reserve Chairman Jerome Powell’s testimony and key inflation data for more cues on interest rates this week.
Futures were steady after Wall Street surged to record highs on Friday as weaker-than-expected data boosted optimism that the Federal Reserve will start cutting interest rates by September. Powell’s testimony is expected to provide further clues on that front.
The S&P 500 index fell 0.1% to 5,615.25 points, while it was down 0.1% at 20,604.25 points by 19:12 ET (23:12 GMT). It fell 0.1% to 39,647.0 points.
Powell Testifies, CPI Data Closes
He will appear before the Senate and House of Representatives on Tuesday and Wednesday, respectively. Most of his testimony is expected to focus on monetary policy.
Powell had suggested last week that while the Fed had made some progress toward lowering inflation, policymakers still lacked the confidence to start cutting interest rates. The minutes from the Fed’s June meeting reinforced that notion.
Weaker-than-expected labor data last week boosted hopes of a slowdown in the labor market, giving the Federal Reserve more impetus to start cutting interest rates.
But inflation is likely to be the key point the central bank will consider when cutting rates. Inflation data is due later this week and is likely to be linked to the bank’s interest rate outlook.
Wall Street hits all-time high on rate cut hopes
Growing expectations of a September interest rate cut prompted investors to buy riskier assets, helping Wall Street indexes hit new highs. U.S. stocks fared much better than U.S. equities, as the AI buzz kept traders largely biased toward technology stocks.
The S&P 500 rose 0.5% to 5,567.19 on Friday, while the Nasdaq Composite added 0.9% to 18,351.34. The Dow Jones Industrial Average lagged behind, rising 0.2% to 39,375.87.
Market participants were seen expecting a 25 basis point rate cut in September at more than 72%, up from 57.9% last week.
Second quarter earnings start this week
Aside from interest rate expectations, the focus this week is also on the second-quarter earnings season, which is set to kick off with a string of major bank earnings on Friday.
Markets will be watching to see how strong corporate earnings are amid pressures from higher interest rates and steady inflation.
JPMorgan Chase & Co. (NYSE:), Wells Fargo & Company (NYSE:), and City Group Inc. (NYSE:) is scheduled to report earnings on Friday.