US STOCKS-Futures edge up on megacaps boost; earnings, Fed comments in focus
U.S. stock index futures experienced an uptick as megacap growth stocks like Microsoft, Amazon.com, and Tesla showed positive movement before the market opened, each advancing between 0.5% and 1.1%. This boost came amid a rush of corporate earnings and statements from Federal Reserve officials, which investors scrutinized for insights into the economic landscape.
The S&P 500 and Nasdaq had previously closed lower, weighed down by rising Treasury yields. However, yields on government bonds saw a slight retreat, with the 10-year note last noted at 4.6469%.
Comments on monetary policy from the Federal Reserve have been keenly observed, with top officials including Fed Chair Jerome Powell highlighting the necessity for monetary policy to remain restrictive. Without hinting at future rate cuts, recent statements emphasized that the fight against inflation did not warrant easing borrowing costs anytime soon.
“While stopping short of mentioning rate hikes, Chairman Powell on Tuesday highlighted that ‘the recent data have not given greater confidence in inflation’,” stated Achilleas Georgolopoulos, an investment analyst, noting a cautious stance against early rate reductions despite market anticipation.
The potential for a hawkish tone from Federal Reserve Board Governor Michelle Bowman and Cleveland Fed President Loretta Mester later in the day could further impact market sentiment, especially with U.S. data releases on the lighter side.
Market participants are on edge, with around a 43% chance anticipated by some for the Federal Reserve to start rolling back rates by July, as indicated by the CME FedWatch tool.
Investor focus will also be on the Fed’s upcoming release of the “Beige Book” report, expected to shed light on the current state of the U.S. economy.
In early trading, Dow e-minis were up by 135 points or 0.35%, while S&P 500 e-minis saw an increase of 21.25 points or 0.42%. Nasdaq 100 e-minis also rose by 53 points or 0.30%.
United Airlines reported a noteworthy 5.2% rise after projecting better-than-anticipated earnings for the current quarter, influencing a positive trend across the airline sector with American Airlines, Delta Air Lines, and Southwest Airlines experiencing gains between 0.9% and 1.8%.
In the world of technology, Mobileye observed a 3.1% increase following news that the Israeli automotive tech company is set to distribute at least 46 million new assisted-driving chips.
Contrastingly, JB Hunt Transport Services saw a 7.9% drop after the trucking firm failed to meet Wall Street expectations for the first quarter. Similarly, apparel retailer Urban Outfitters underwent a 5.3% decrease after an adjustment in its rating to “underperform” by Jefferies.
This mix of corporate achievements and economic indicators offers a complex backdrop for investors navigating the ongoing uncertainties surrounding inflationary pressures and Federal Reserve policies, highlighting the importance of being attuned to both market trends and macroeconomic signals.
