Ankika Biswas and Johan M. Cherian
(Reuters) – Futures tracking major U.S. stock indexes rose on Monday after recent selling as investors braced for a busy week ahead of the Federal Reserve’s interest rate decision, earnings reports from big tech companies and a key jobs report.
While Wall Street’s main stock indexes tumbled last week amid a sell-off in big tech stocks, shares of Nvidia, Alphabet, Amazon.com Inc and Meta Platforms Inc rose between 0.7% and 1.1% before the close.
Shares in electric car maker Tesla rose 1.4% after brokerage Morgan Stanley added the stock to its list of U.S. auto stocks as a “top pick.”
As of 7:13 a.m. ET, the Dow e-mini was up 163 points, or 0.40%, the S&P 500 e-mini was up 20.5 points, or 0.37%, and the Nasdaq 100 e-mini was up 112.59 points, or 0.59%.
The three major U.S. stock indexes rose more than 1% on Friday after recent data suggesting an easing in the job market and a positive U.S. inflation report stoked hopes of an early start to monetary policy easing.
But the S&P 500 and Nasdaq were unable to recoup losses, with disappointing earnings from technology companies causing the indexes to post their biggest one-day drop since 2022 on Wednesday and end the weekend lower.
The next round of earnings reports from Wall Street’s biggest technology companies, including Microsoft Corp., Meta, Apple Inc. and Amazon.com Inc., begins on Tuesday.
Investors will be watching for signs that the overvaluation of these high-momentum stocks is justified and that the AI-driven stock rally still has room to grow.
“Market volatility is likely to continue with major companies still scheduled to report earnings this week,” UBS analysts said.
Wall Street has seen a record rally since the start of the year, but concerns about the dominance of big technology companies have seen investors pull money out of those blue-chip names and pump it into laggards, including small and mid-cap stocks that are expected to benefit from a low-interest rate environment.
“We see the recent exodus (from large-cap stocks) creating an opportunity for re-entry, particularly for companies with profit growth prospects,” UBS analysts said.
The Russell 2000 index recorded its third straight weekly gain on Friday, moving closer to recovering levels last seen more than two and a half years ago.
Investors are now hoping that the Fed will signal a rate cut, possibly as soon as September, at its policy meeting on Wednesday. Any hawkish comments from central bank officials are likely to send stocks under renewed selling pressure.
The expectation of a 25 basis point rate cut by September remains at around 89%, according to CME’s FedWatch tool, but that’s up significantly from around 60% last month.
A series of employment reports due this week, including the Job Openings and Labor Movement survey, ADP Payrolls and Nonfarm Payrolls, and weekly jobless claims, will be scrutinized for concrete clues about some easing in the labor market.
Among other gainers, McDonald’s Inc rose 0.8 percent in choppy trading after it reported an unexpected decline in global same-store sales for the quarter.
Cryptocurrency stocks including Coinbase Global, Riot Platforms and Marathon Digital rose between 3.7% and 4.1% as bitcoin prices surged to their highest in seven weeks.
Healthcare company Abbott Laboratories fell 6.7 percent after a jury awarded the company $495 million in damages in a trial over its premature baby formula.
(Reporting by Ankika Biswas and Johan M. Cherian in Bengaluru; Editing by Pooja Desai)
