U.S. stock futures were relatively flat on Monday night, following a positive start to the week. Investors are preparing for a week filled with important events, including megacap earnings reports, the latest Federal Reserve interest rate decision, and the release of the April jobs report. Stocks are also on track to end a six-month winning streak, with the Dow Jones Industrial Average futures falling slightly by 0.03%, S&P 500 futures sliding 0.04%, and Nasdaq 100 futures climbing 0.02%. Despite this, Wall Street had a positive session recently thanks to a boost from Tesla, which hit a milestone in rolling out advanced driver-assistance technology in China, and an upgrade for Apple. The S&P 500 increased by 0.32%, while the Nasdaq Composite rose by 0.35% and the Dow Jones Industrial Average climbed by 0.38%.
However, stocks are poised for their first losing month since October as expectations for interest rate cuts have decreased significantly compared to the beginning of the year. The Dow Jones Industrial Average is expected to see a loss of over 3% in April, while the S&P 500 and Nasdaq Composite are set for declines of over 2% each. Market participants are now forecasting only a quarter percentage point cut in 2024, down from the six or seven that were previously anticipated, as inflation remains persistent and the economy continues to show resilience. This has raised concerns that the Fed may keep rates elevated for a longer period of time. Dan Greenhaus, chief strategist at Solus Alternative Asset Management, noted that the strong rally seen since October, combined with inflationary pressures, could lead to a slight dampening of the market in the near term.
The upcoming week is expected to be busy, with the Federal Reserve holding its two-day policy meeting starting Tuesday. While it is widely expected that interest rates will remain unchanged, investors are concerned that Fed Chief Jerome Powell’s post-meeting comments may take on a more hawkish tone in light of recent inflation reports. Additionally, this week marks the busiest period of corporate earnings reports, with Amazon and Apple set to release their quarterly results on Tuesday and Thursday, respectively. Other companies reporting results on Tuesday include McDonald’s, Coca-Cola, Restaurant Brands, Eli Lilly, and PayPal. Following the close of trading on Tuesday, Advanced Micro Devices, Pinterest, Super Micro, and Starbucks are expected to announce their results. The April jobs report is also due to be released later in the week, adding to the already full calendar of events.
Overall, the stock market continues to face uncertainty as investors navigate through a mixed economic environment. While recent positive developments, such as Tesla’s milestone and Apple’s upgrade, have provided some support to equities, concerns around inflation and interest rate expectations have put pressure on stocks in recent weeks. The performance of key indices like the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite in April will be closely watched as market participants assess the broader market trends and potential opportunities for the future. As the week progresses, investors will be closely monitoring the outcomes of the Fed meeting, corporate earnings reports, and economic data releases to gauge the market’s direction and potential investment opportunities.
