After experiencing heavy losses the previous week, futures tied to Wall Street’s main indexes saw gains on Monday. This positivity was fueled by investor optimism surrounding the soft landing prospects for the U.S. economy. The upcoming crucial inflation report added to the hopeful sentiment in the market.
In premarket trading, all megacap stocks showed positive movement. Notably, Tesla (NASDAQ:TSLA) led the gains with a 1.7% increase. Additionally, chip stocks, which faced significant selling pressure in the previous week, also saw an upward trend. AMD (NASDAQ:AMD) and Marvell (NASDAQ:MRVL) Technology advanced by 1% and 1.7%, respectively.
Global markets experienced volatility as uncertainty loomed over the health of the U.S. economy. This uncertainty spread across assets, creating a challenging period for investors. Factors contributing to this volatility included the Federal Reserve’s policy shift and concerns over stretched valuations.
The weaker-than-expected August jobs data from Friday raised worries about economic growth. This led to the Nasdaq Composite having its worst week since January 2022, while the S&P 500 saw its largest weekly drop since March 2023. Despite this, the S&P 500 remains 13.4% higher for the year, indicating lingering hopes for a soft landing of the U.S. economy.
There is cautious optimism in the markets regarding the potential benefits of rate cuts in preventing a downturn. However, concerns arise that a sharp decline in economic conditions could overshadow the positive effects of rate cuts. The focus is on the Federal Reserve’s expected rate-cutting cycle, set to begin next week.
Market attention will be on the U.S. consumer prices data set to release on Wednesday. Expectations suggest a moderation in headline inflation to 2.6% on a yearly basis for August. Following this, producer prices data is awaited on Thursday. Money markets predict a 75% chance of a 25-basis-point rate reduction by the Fed next week and anticipate a total easing of 100 bps by the year-end.
In individual company movements, Boeing (NYSE:BA) saw a 4.7% increase following a tentative agreement with a union representing over 32,000 workers in the U.S. Pacific Northwest. This agreement may help avoid a potential strike by Sept. 13. Dell Technologies (NYSE:DELL) and Palantir (NYSE:PLTR) rose by 5.9% and 8%, respectively. Erie also climbed 3% in low volumes as they prepare to join the S&P 500 index on Sept. 23, replacing other companies in the index.