U.S. stocks braced for a resumption of a rally on Monday, fueled by the Federal Reserve’s message that interest rate cuts are imminent, in preparation for a busy week dominated by Nvidia’s (NVDA) earnings reports.
Futures on the S&P 500 (ES=F) rose about 0.2%, while Dow Jones Industrial Average futures (YM=F) added 0.1%. Contracts on the tech-heavy Nasdaq 100 (NQ=F) were broadly flat after the major indexes all gained more than 1% for the week.
Stocks are approaching new record highs after Chairman Jerome Powell made it crystal clear the Fed is ready to move to lower interest rates in September. The benchmark S&P 500 (^GSPC) index is less than 1% away from hitting its all-time high close, set in July.
Markets quickly priced in cuts totaling 1% by the end of 2024. But with just three Fed meetings left this year — in September, November and December — and the August jobs report yet to come, Wall Street is wondering when and if a 0.5% cut is likely.
Now, the focus is firmly on Nvidia’s earnings — the week’s biggest event — which will likely determine whether market sentiment remains bullish. If the chipmaker’s results on Wednesday fall short of lofty expectations, it could further dent the AI ​​trade that has fueled stock gains — and in turn challenge the market’s rebound from the August lows.
Also scheduled for Friday is an update on the Fed policymakers’ preferred gauge of inflation, the PCE index print, which will likely be factored into rate path calculations. A lecture on second-quarter GDP is also scheduled for Thursday.
Elsewhere, oil prices rose nearly 3% amid reports of production cuts in Libya and fears of escalating tensions in the Middle East after both Israel and Hezbollah launched strikes. Global benchmark Brent crude futures (BZ=F) rose to $81.81 a barrel, while U.S. benchmark WTI crude futures (CL=F) traded hands at $76.90 a barrel.
