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U.S. stock futures rose Monday, flirting with fresh 10-month highs, as traders eyed crucial inflation data and central bank decisions in coming sessions.
How are stock-index futures trading
-
S&P 500 futures
ES00,
+0.26%
rose 13 points, or 0.3%, to 4318 -
Dow Jones Industrial Average futures
YM00,
+0.13%
added 71 points, or 0.2%, to 34273 -
Nasdaq 100 futures
NQ00,
+0.46%
eased 76 points, or 0.5%, to 14812
On Friday, the Dow Jones Industrial Average
DJIA,
rose 43 points, or 0.13%, to 33877, the S&P 500
SPX,
increased 5 points, or 0.11%, to 4299, and the Nasdaq Composite
COMP,
gained 21 points, or 0.16%, to 13259.
What’s driving markets
Stock futures looked to extend their recent rally Monday — though the positivity was tinged with caution ahead of a week stuffed with potential tripwires.
The S&P 500 finished Friday at its highest close in 10 months, having enjoyed a four-week winning streak as investors became more hopeful that the U.S economy can avoid a sharp economic slowdown as easing inflation allows the Federal Reserve to pause monetary tightening cycle.
That bullish narrative will be put to the test in coming days.
The consumer prices index for May will be published on Tuesday. Investors will be hoping to see annual CPI inflation — which hit a 40-year high of 9.1% last June and dropped to 4.9% in this April — fall further, with economists forecasting a dip to 4%.
Such a decline would likely cement the market’s expectations that the Fed will leave interest rates unchanged at a range of 5% to 5.25% after the conclusion of its meeting on Wednesday.
However, analysts noted that recent moves by other central banks means traders should take nothing for granted.
“After a week highlighted by surprise rate hikes from the RBA [Reserve Bank of Australia] and BoC [Bank of Canada], investors could be hawkishly absorbed ahead of a bonanza of central bank meetings this week,” said Stephen Innes, managing partner at SPI Asset Management.
And there are also announcements from the European Central Bank on Thursday, and the Bank of Japan on Friday, to navigate. The former is expected to raise rates by another 25 basis points and the latter is forecast to stand pat.
Still, for now, traders seem pretty relaxed. The CBOE VIX
VIX,
index, an option-based gauge of expected S&P 500 volatility, sits at 14.4, near its lowest since early 2020.
And the CBOE Equity put/call ratio has dropped to 0.50, its lowest in a year as traders increase their relative purchases of bullish bets.
“Investors are flocking into call options because no one wants to miss a further rally in stock markets, but no one is sure that the rally will continue given the fact that the Fed has hiked rates at a record speed since last year, leading to the failure of a couple of U.S. regional banks on the way,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
There’s not much in the way of top tier economic data on the slate Monday, though the federal budget report for May will be published at 2 p.m. Eastern.
