Futures muted as traders buckle up for busy data week, inflation test

Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., February 23, 2024. REUTERS/Brendan McDermid/File Photo

By Amruta Khandekar and Bansari Mayur Kamdar

(Reuters) -U.S. stock index futures were subdued on Monday after last week’s scorching AI-driven rally, as investor focus returns to potential rate cuts from the Federal Reserve that key inflation and other economic reports expected this week could offer clues on.

The release of January’s personal consumption expenditures price index (PCE)- the Fed’s preferred inflation gauge – on Thursday could hinder the recent stocks rally if the data points to persistent price pressures.

A bumper forecast from heavyweight chip designer Nvidia in the previous week added to this year’s artificial intelligence (AI) frenzy, propelling Wall Street to new peaks and overshadowing the gloom due to a likely delayed start to the Fed’s easing cycle.

The S&P 500 and the Dow Jones industrials both notched all-time highs last week, while the tech-heavy Nasdaq came within a close range of its record intraday peak hit in November 2021.

“Now, as a result of the artificial intelligence (AI) induced surge, investors wonder if the market will top out or broaden out,” said Sam Stovall, chief investment strategist at CFRA, in a note, suggesting the rally won’t be limited to the AI sector.

“We think it will broaden out – eventually, but not before investors feel assured that the Fed will not postpone the first rate cut beyond the second quarter of this year.”

Traders pushed back bets of the first rate cut to June from May earlier this month after hotter-than-expected readings on consumer and producer prices.

Data on durable goods, consumer confidence and manufacturing activity will also be on investors’ watchlist this week.

At 7:00 a.m. ET, Dow e-minis were down 33 points, or 0.08%, S&P 500 e-minis were down 1.5 points, or 0.03%, and Nasdaq 100 e-minis were down 1 points, or 0.01%.

Megacap growth stocks were mixed in premarket trading on Monday, though Nvidia continued to outperform with an advance of 1% after hitting $2 trillion in market value for the first time on Friday.

Warren Buffett’s Berkshire Hathaway rose 4% after the conglomerate on Saturday posted its second straight record annual operating profit on a boost from its insurance business.

Shares of Moderna slid 1.4% as HSBC downgraded the U.S. vaccine maker to “reduce” from “hold.”

Intuitive Machines slumped 30.9% after the company said its spacecraft had tipped over shortly after touching down on the lunar surface.

Domino’s Pizza jumped 5.6% on surpassing Wall Street expectations for quarterly same-store sales, helped by a revamp of its loyalty program and its delivery partnership with Uber Eats.

(Reporting by Amruta Khandekar and Bansari Mayur Kamdar; Editing by Shinjini Ganguli)