On Thursday, futures for major US stock indexes saw an uptick, spurred by an economic report that bolstered the argument for the Federal Reserve to lower interest rates. Market watchers are keenly awaiting further data and statements from Fed officials to glean insights into the potential timing of these adjustments.
The S&P 500 and Nasdaq ended the previous session on a positive note following revelations that growth in the US services sector decelerated in March. This comes as investors digest remarks from Federal Reserve officials, including Chair Jerome Powell, who collectively hinted at the possibility of rate reductions later in the year. Powell emphasized that such a move would be contingent on a more confident outlook that inflation is on a steady decline towards the Fed's 2% goal.
Comments from Powell hold significant weight, especially as recent data on inflation and the labor market have exceeded expectations, keeping the possibility of interest rate reductions on the table, according to Kathleen Brooks, research director at XTB.
Despite the anticipation, investors remain cautious about the precise timing for these rate cuts, especially in light of mixed economic indicators. Earlier in the week, equities took a hit from robust economic reports, including those on manufacturing activity and job openings, which cast doubt on the market's expectation of three rate cuts within the year.
Current speculations in the money markets suggest a nearly 59% likelihood of at least a 25 basis point cut in interest rates by June, as per the CME Group's FedWatch tool.
Attention is also directed towards comments from Fed policymakers, including Richmond Fed President Thomas Barkin and Cleveland Fed President Loretta Mester, for additional insights into future monetary policy directions.
Investors are also set to focus on upcoming economic data, including initial jobless claims for the week ending March 30 and the crucial nonfarm payrolls report due on Friday.
Early trading saw S&P 500 E-minis climbing by 16.5 points or 0.31%, Nasdaq 100 E-minis advancing by 82.75 points or 0.45%, and Dow E-minis increasing by 111 points or 0.28%.
In premarket activity, several large-cap growth stocks, including Meta Platforms, Amazon.com (AMZN, Financial), and Nvidia, witnessed gains ranging from 0.5% to 1.3%.
Levi Strauss saw its shares soar by 8.3% after the company upgraded its yearly profit outlook, attributing the positive adjustment to cost-saving initiatives and reduced discounting. Similarly, Micron Technology (MU, Financial) enjoyed a 1.1% rise, building on a 4.3% increase from the prior session, which saw the stock closing at an all-time high.
