By Lisa Pauline Mattackal and Johann M Cherian
(Reuters) -U.S. stock index futures rose marginally on Wednesday as investors strengthened bets on an earlier start to the Federal Reserve’s rate cuts this year than previously expected, after a slew of economic data pointed to slowing economic growth.
Wall Street ended Tuesday’s session slightly higher, paring some losses, with rate-sensitive real estate stocks leading sector gains.
That came on the heels of initial losses after data showed U.S. job openings in April fell to their lowest in more than three years, the latest report to suggest growth in the world’s largest economy is cooling. This allows the Federal Reserve more leeway to cut interest rates.
Markets are now pricing in about 44 basis points of easing this year, according to the LSEG rate probabilities app. Additionally, expectations for a September rate reduction now stand around 65%, versus below 50% last week, according to the CME’s FedWatch tool.
“The JOLTS report follows a string of soft economic data releases and suggests a gradual cooling in the US economy… market participants are likely to welcome a cooling economy and the prospect of monetary easing, given the overwhelmingly bullish outlook among investors,” analysts at BCA Research said in a note.
Signs of steady inflation and resilient economic growth forced markets to dial back hopes for both the timing and pace of interest-rate cuts at the start of the year, when many had expected policy easing to start as early as March.
Rate-sensitive megacap stocks rose in premarket trading, with Nvidia (NASDAQ:), Microsoft (NASDAQ:) and Amazon.com (NASDAQ:) up between 0.3% and 1.0%.
Investors now await the nonfarm payrolls report, due on Friday, for a comprehensive evaluation of the labor market. The ADP National Employment Report, as well as surveys on the services sector, are expected later on Wednesday.
At 7:09 a.m. ET, were up 45 points, or 0.12%, were up 9.5 points, or 0.18%, and were up 71.5 points, or 0.38%.
Among others, Dollar Tree (NASDAQ:) slipped 2.7% in choppy trading after a disappointing quarterly profit forecast. The budget retailer said it would explore options that include a potential sale or spin-off of Family Dollar.
Intel (NASDAQ:) gained 0.8% after buyout firm Apollo Global Management (NYSE:) agreed to purchase a 49% equity interest for $11 billion in a joint venture related to the chipmaker’s Ireland manufacturing unit.
Applied Materials (NASDAQ:) added 1.9% after brokerage Barclays upgraded the chip stock to “equal weight” from “underweight”.
CrowdStrike Holdings (NASDAQ:) jumped 9.7% after forecasting second-quarter revenue above estimates when markets closed on Tuesday, helped by strong demand for its cybersecurity offerings.
Hewlett Packard Enterprise (NYSE:) forecast third-quarter revenue above Street expectations, helped by upbeat demand for its artificial intelligence servers, sending its shares up 15.0%.
Read the full article here
