By Lisa Pauline Mattackal and Johann M Cherian
(Reuters) -Wall Street was set for a flat open on Monday as investors moved to the sidelines ahead of key inflation data and a Federal Reserve meeting scheduled for this week, looking for hints on the central bank’s policy-easing stance this year.
After a choppy week, indexes closed slightly lower on Friday after conflicting data showed that while Nonfarm Payrolls numbers for May were much stronger than expected, unemployment had ticked higher and household surveys betrayed signs of weakness in the economy.
“Investors were hoping for a more polarized set of data points, but instead, the unemployment number increasing in contrast to the actual jobs that were added are confusing a lot of people, making the job of the Fed more difficult,” said Peter Andersen, founder of Andersen Capital Management.
Attention now turns to the Consumer Price Index inflation data for May on Wednesday as well as the conclusion of the Fed’s two-day policy meeting, in which the central bank is overwhelmingly expected to hold interest rates steady.
Markets dialed back expectations for rate cuts by the Fed in September after Friday’s data, with pricing now reflecting a less-than-50% chance of a reduction. Expectations had risen as high as 69% last week.
Traders also trimmed their expectations for the amount of easing this year, with pricing implying just one cut versus two prior to the payrolls data, according to LSEG data.
“Right now, interest rates are what I would call at equilibrium and are perfectly positioned for a growing steady economy. I would caution the Fed on making any changes at this point,” Andersen said.
Despite evolving rate-cut expectations, all three major indexes ended the last week higher, with weekly gains led by a nearly 4% rise in the ‘s information technology sector, which spearheaded Wall Street’s recent rallies after stocks such as chipmaker Nvidia (NASDAQ:)’s, seen as a strong AI bet, soared.
Nvidia edged 0.2% down in premarket trading in the wake of a 10-for-one stock split that went into effect after markets closed on Friday, sparking chatter over its chances of inclusion in the blue-chip Dow.
Producer Price Index data for May and the first release of the University of Michigan’s consumer sentiment survey are also due this week.
At 8:21 a.m. ET, were down 15 points, or 0.04%, were down 1.25 points, or 0.02%, and were down 4 points, or 0.02%.
Apple (NASDAQ:) gained 0.4% as investors awaited the company’s annual developer conference for updates on how it is integrating artificial intelligence into its offerings.
Southwest Airlines (NYSE:) jumped 7.8% after a report that activist investor Elliott Investment Management has built up a nearly $2 billion dollar position in the company.
CrowdStrike (NASDAQ:), KKR & Co (NYSE:) and GoDaddy (N:) rose between 2.9% and 7.9% after S&P Dow Jones Indices said the companies would be included in the S&P 500 as of June 24.
Diamond Offshore Drilling (OTC:) added 8.0% after oilfield services firm Noble said it would buy the smaller rival in a $1.59 billion deal.
Advanced Micro Devices (NASDAQ:) dropped 2.6% after Morgan Stanley downgraded the chip stock to “equal weight” from “overweight”.
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