After a week of heavy losses, Wall Street is set for a higher open on Monday. Investors are remaining optimistic about a soft landing scenario for the U.S. economy. This optimism comes ahead of a crucial inflation report later in the week. All megacap stocks rose in premarket trading, with Tesla leading the gains by rising 2.2%.
Most chip stocks, which saw heavy selling last week, have also started to recover. Companies like AMD and Marvell Technology have seen advances of 1% and 1.5% respectively. Global markets were rattled last week due to uncertainty over the U.S. economy’s health. This uncertainty rippled across assets, adding fuel to an already volatile period for investors.
Friday’s weaker-than-expected August jobs data spurred worries on economic growth. This drove the Nasdaq Composite to its worst week since January 2022, while the S&P 500 saw its biggest weekly drop since March 2023. However, the S&P 500 is still 13.4% higher so far this year. Hopes of a soft landing for the U.S. economy remain alive with the Fed expected to begin its rate-cutting cycle next week.
Markets will be intently focused on U.S. consumer prices data expected to be released on Wednesday. This data is anticipated to show a moderation in headline inflation in August to 2.6% on a yearly basis. On a monthly basis, it is expected to remain unchanged at 0.2%. Analysts believe that inflation is sufficiently under control for the Fed to begin moving monetary policy in a less restrictive direction.
Money markets currently see a 75% chance of a 25-basis-point rate reduction by the Fed next week. There is an expectation of a total monetary easing of 100 bps by the end of the year. Bank of America, one of Wall Street’s more conservative brokerages, has raised its forecast to match most of its peers’ expectations of 25 bps of easing in each of the three remaining policy meetings this year.
At 08:25 a.m. ET, Dow E-minis were up 227 points, Nasdaq 100 E-minis were up 111 points, and S&P 500 E-minis were up 28.75 points. The upcoming debate between Democrat Kamala Harris and Republican Donald Trump will be closely eyed by investors. In terms of individual movers, Boeing advanced 3.7% after reaching a tentative agreement with a union. Eli Lilly climbed 1% after appointing a new chief financial officer.
Dell Technologies and Palantir rose 4.9% and 8.4% respectively, while Erie climbed 3.3%. These companies are set to join the S&P 500 index on Sept. 23. They will replace American Airlines Group, Etsy, and Bio-Rad Laboratories in the index.