Futures Muted As Caution Looms Ahead Of Data-Packed Week

U.S. stock index futures were subdued on Monday, following a strong close to the previous week, with focus on a slew of economic data points which could clear out some uncertainty on the outlook for interest rate cuts.

The latest milestone in a four-month rally among Wall Street’s main indexes was the S&P 500 closing above the psychological 5,000-point level on Friday, while the Nasdaq briefly surpassed the 16,000 mark, bringing it closer to its all-time high hit in November 2021.

“Investors now wonder if it is time to take some profits ahead of a likely market drop from exhaustion after scaling such a prominent peak,” said Sam Stovall, chief investment strategist at CFRA Research.

“While short-term digestions of gains have indeed occurred, they have been fairly short in duration, so view them more as reasons to buy than bail.”

Much of the frenzy has been led by megacaps with greater exposure to artificial intelligence, aided further by hopes of imminent rate cuts and upbeat outlook from businesses. LSEG data showed S&P 500 firms expect earnings to rise by 9.7% this year.

The benchmark index’s forward price-to-earnings ratio rose to 20.4 times in the previous week, way past the historic average of 15.7, as per LSEG data, stoking some concerns over rich valuations.

Traders await January’s Consumer Price Index (CPI), due on Tuesday, to determine what could be the timeline for monetary policy easing this year. Other data through the week also include producer price index (PPI), industrial production, retail sales, housing numbers and preliminary University of Michigan consumer sentiment.

With growing data reflecting a robust economy, central bankers have effectively been able to push back against traders’ expectations for early rate cuts. The odds for at least a 25-basis-point rate reduction in May have dropped to 61%, from over 95% at the start of 2024, as per the CME FedWatch Tool.

Remarks from Federal Reserve officials including Governor Michelle Bowman, Richmond President Thomas Barkin and Minneapolis chief Neel Kashkari, scheduled through the day, will be scrutinized for any hints on the timing for rate cuts.

At 7:23 a.m. ET, Dow e-minis were down 25 points, or 0.06%, S&P 500 e-minis were down 0.25 points, and Nasdaq 100 e-minis were up 0.25 points.

On the quarterly earnings front, Trimble (TRMB.O), added 8.6% in premarket trading ahead of its results, while Coca-Cola (KO.N), Biogen (BIIB.O), and Airbnb (ABNB.O), are among well-known names expected to report through the week.

Citigroup (C.N), slipped 1.4% after Reuters reported U.S. regulators have asked the lender for urgent changes to how it measures default risk of trading partners and its own auditors have found a plan to improve internal oversight to be lacking.

Applied Digital (APLD.O), shed 6.2% after saying revenue from its Ellendale data center hosting facility would take a hit in the current quarter by an ongoing power outage.

Diamondback Energy (FANG.O), open rose 0.9% after announcing a deal to buy the largest privately held oil and gas producer in the Permian basin, Endeavor Energy Partners, for $26 billion.

Joby Aviation (JOBY.N), gained 5.4% as the electric-powered aircraft maker signed an agreement to launch air taxi services in the Emirate by early 2026.

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