Futures muted as traders buckle up for inflation test

By Thomson Reuters Feb 26, 2024 | 4:53 AM

(Reuters) – U.S. stock index futures were subdued on Monday after last week’s scorching AI-driven rally as investors once again shifted their focus to the Federal Reserve’s monetary policy path and awaited economic reports including key inflation data this week.

A bumper forecast from heavyweight chip designer Nvidia in the previous week boosted euphoria around artificial intelligence (AI), propelling Wall Street to new peaks and overshadowing the gloom due to a likely delayed start to the Fed’s easing cycle.

The S&P 500 and the Dow Jones industrials both notched all-time highs last week, while the tech-heavy Nasdaq came within a close range of its record intraday peak hit in November 2021.

As the fourth-quarter earnings season winds down, investors turn their focus back on upcoming economic data, which will shape expectations for the timing of U.S. interest rate cuts.

The release of January’s personal consumption expenditures price index (PCE)- the Fed’s preferred inflation gauge – on Thursday could hinder the recent stocks rally if the data points to persistent price pressures.

Hotter-than-expected readings on consumer and producer prices earlier this month had led traders to push back bets of the first rate cut to June from May.

“While a hot (PCE) print is likely to again question the last mile of the disinflation train, there is little scope for markets to price in any additional hawkishness,” said Charu Chanana, head of FX strategy at Saxo Markets in a note.

Data on durable goods, consumer confidence and manufacturing activity will also be on investors’ watchlist this week.

At 5:22 a.m. ET, Dow e-minis were down 53 points, or 0.14%, S&P 500 e-minis were down 3.5 points, or 0.07%, and Nasdaq 100 e-minis were down 4.75 points, or 0.03%.

Megacap growth stocks were mixed in premarket trading on Monday, though Nvidia continued to outperform with an advance of 1.2% after hitting $2 trillion in market value for the first time on Friday.

Warren Buffett’s Berkshire Hathaway rose 4.5% after the conglomerate on Saturday posted its second straight record annual operating profit on a boost from its insurance business.

Shares of Moderna slipped 2.3% as HSBC downgraded the U.S. vaccine maker to “reduce” from “hold.”

Intuitive Machines slumped 34.5% after the company said its spacecraft had tipped over shortly after touching down on the lunar surface.

(Reporting by Amruta Khandekar; Editing by Shinjini Ganguli)