S&P500 and Nasdaq 100: Stock Futures Rise Following Fed's Rate Cut

S&P500 and Nasdaq 100: Stock Futures Rise as Fed Rate Cut Fuels Optimism

U.S. stock futures edged higher Monday, building on last week’s rally driven by the Federal Reserve’s decision to cut interest rates by 50 basis points, its first in four years. The Dow Jones Industrial Average closed at a record high above 42,000, while the S&P 500 and Nasdaq gained over 1% for the week. Initial volatility following the rate announcement gave way to optimism, as investors viewed the cut as a proactive move to support economic stability.

Daily E-mini S&P 500 Index

Technically speaking, all eyes are on the 50-day moving average at 5604.97 as support. The market currently sits reasonably above this indicator, so we’re not concerned about it being overbought.

Key Sector Movements

• Technology: Tech stocks saw notable gains. Intel Corporation (INTC) rose 4% following reports of a potential $5 billion investment from Apollo Global Management, signaling confidence in its future despite a challenging year. Micron Technology also climbed over 1%, with analysts bullish on its upcoming earnings report, driven by strong demand for artificial intelligence.
• Energy: Constellation Energy Corporation added 3% after Morgan Stanley raised its price target, citing growth potential linked to the company’s plans to restart the Three Mile Island nuclear plant, addressing power demands from major tech clients like Microsoft.
• Consumer Discretionary: General Motors declined 2% as Bernstein downgraded the stock, citing rising U.S. inventories and struggles in international markets. The automaker continues to face challenges in navigating global supply chain issues.
• Communications: Pinterest gained over 2% after Deutsche Bank initiated coverage with a buy rating, highlighting strong revenue prospects as the platform expands its user base and engagement.

Fed's Continued Influence

In light of the rate cut, market analysts are closely watching the Federal Reserve's next moves. Ronald Temple of Lazard underscored the Fed's readiness to intervene to prevent further labor market weakening. Atlanta Fed President Raphael Bostic also supported the rate reduction, suggesting that more policy easing may follow if economic conditions necessitate.

Economic Reports in Focus

Monday’s economic data, especially in the service and manufacturing sectors, will be meticulously scrutinized, alongside speeches from key Fed officials. Insights from these reports may offer further clues on the Fed’s forthcoming adjustments to monetary policy.

Market Forecast

With the Fed’s proactive stance, the short-term outlook for equities appears bullish. The tech and energy sectors are set to continue leading gains, while challenges in consumer discretionary stocks, particularly in autos, could exert pressure on broader market performance. Traders should closely monitor economic data and earnings reports this week for additional market cues.