Futures recover after Friday sell-off, Mideast tensions ease

By Thomson Reuters Apr 22, 2024 | 5:16 AM

(Reuters) – U.S. stock index futures gained on Monday after slumping in the previous session as easing Middle East tensions buoyed risk sentiment, while investors looked ahead for an action-packed week with major tech earnings and a key inflation print.

The Nasdaq and the S&P 500 ended lower on Friday as Netflix shares weighed after a dour quarterly earnings report, with both the indexes suffering six straight sessions of declines last week, their longest losing streak since October 2022.

Nvidia led gains across megacap growth stocks with a 2.4% rise in premarket trading, rebounding from a 10% drop in the last session.

Other stocks such as Meta Platforms, Amazon.com and Alphabet edged higher between 0.3% and 0.9%.

Tesla, Meta Platforms, Alphabet and Microsoft will be in focus this week as the companies gear up to deliver their quarterly numbers, whose performance could further test the rally in U.S. stocks.

The risk-on mode was also supported by signs of easing tensions in the Middle East, as Iran’s foreign minister said on Friday Tehran was investigating an overnight attack, adding that so far a link to Israel had not been proven as he downplayed the strike.

“Overnight, risk sentiment is better on relief rally that no adverse geopolitical headlines were reported on the weekend,” Mohit Kumar, chief economist Europe at Jefferies, said in a note.

“Our cautious stance continues this week, though the repricing from last week, particularly in tech stocks would give an opportunity to buy the dip.”

Equities have sold-off recently as market participants readjust their interest rate cut expectations from the U.S. Federal Reserve after a string of strong economic data signaling persistent inflationary pressures.

Money markets are now pricing in just about 38 basis points (bps) of rate cuts this year, down from about 150 bps seen at the beginning of the year, according to LSEG data.

On the docket this week would be the price consumption expenditure (PCE) index reading for March — the Fed’s preferred inflation gauge — to further ascertain the monetary policy trajectory.

At 5:38 a.m. ET, Dow e-minis were up 161 points, or 0.42%, S&P 500 e-minis were up 24 points, or 0.48%, and Nasdaq 100 e-minis were up 95.75 points, or 0.56%.

Among single stocks, Tesla fell 2.7% before the bell as the electric vehicle maker cut prices in a number of its major markets, including China and Germany, following price reductions in the United States.

Salesforce rose 3.4% after the business software maker backed away from its talks to acquire data-management software firm Informatica after the two companies could not agree on terms.

Informatica’s shares were down 6.3%.

(Reporting by Shristi Achar A in Bengaluru; Editing by Maju Samuel)