Breaking News: U.S. Stock Futures Edge Up as Economy Softens, Rate Cut Hopes Rise - Key Employment Report Awaited Post July 4th Holiday
As the week comes to a close, U.S. stock index futures see a slight uptick amidst signs of a weakening economy, fueling expectations of a potential interest rate cut in September. Investors eagerly await a crucial Labor Department report, scheduled for release at 8:30 a.m. ET, which is projected to reveal a rise of 190,000 non-farm payrolls in June. The unemployment rate is anticipated to hold steady at 4%, with average hourly earnings expected to increase by 0.3%.
Market analyst David Morrison highlights that recent data points have been mixed, with the NFP number surpassing forecasts in eight out of the last ten instances. This poses a challenge for the Fed in justifying rate cuts, as a robust labor market can lead to inflationary pressures. Despite this, reports such as the ADP Employment report and ISM Services PMI indicate a slowdown in economic activity, prompting concerns about potential recession risks.
Market participants are increasingly betting on rate cuts this year, with the likelihood of a 25-basis-point cut in September rising to 68%. The S&P 500 and Nasdaq recently achieved record highs, driven by strong gains in the technology sector. With trading volumes remaining light due to the holiday-shortened week, all three major Wall Street indexes are on track for weekly gains.
Attention is now focused on remarks by New York Fed President John Williams, following the release of the Fed's June policy meeting minutes which acknowledged economic slowdown and subdued price pressures. Early premarket movers include Tesla and Macy's, both experiencing gains on positive news. However, cryptocurrency-related stocks like Coinbase Global and Riot Platforms are facing losses amid concerns over bitcoin's decline and potential sell-offs.
In summary, the current market trends suggest a delicate balance between economic growth, inflation, and the possibility of rate cuts by the Fed. Investors should remain vigilant and stay informed about key economic indicators and policy decisions to navigate potential risks and opportunities in the financial markets.