Jacob Brown
U.S. stock index futures climbed on Monday after steep losses in the last session, relieving Middle East tensions buoyed risk appetite. At the same time, investors looked on to an action-packed week with significant tech profits and a critical inflation print.
The Nasdaq and the S&P 500 faced another round of losses on Friday, extending their losing streak to six consecutive sessions.
The downward trend was largely attributed to the underperformance of Netflix shares following a disappointing quarterly earnings report, marking the longest losing streak for the indexes since October 2022.
Nvidia Leads Megacap Growth Stocks Amid Pre-market Rebound
Despite the overall market downturn, Nvidia saw a notable premarket rebound, gaining 1.7%. This recovery comes after a significant 10% drop in the previous session. Other megacap growth stocks, including Meta Platforms, Amazon.com, and Alphabet, also experienced slight gains ranging from 0.5% to 1.0%.
Focus on Quarterly Numbers of Tesla, Meta Platforms, Alphabet, and Microsoft
Investor attention is expected to be keenly focused on the upcoming quarterly earnings reports from Tesla, Meta Platforms, Alphabet, and Microsoft. The performance of these key companies could have a significant impact on the broader U.S. stock market, potentially testing the resilience of the recent rally.
Signs of Geopolitical Tensions Easing Support Risk-On Sentiment
Amid the market turmoil, signs of easing tensions in the Middle East provided some relief to investors. Iran’s foreign minister indicated that Tehran was investigating an overnight attack, downplaying any immediate link to Israel. This development contributed to a modest relief rally in risk sentiment over the weekend.
Cautious Stance Prevails Despite Repricing Opportunity
Despite the recent dip in tech stocks and the potential buying opportunity it presents, many market analysts maintain a cautious stance.
The adjustment of interest rate cut expectations by the U.S. Federal Reserve, driven by robust economic data and inflationary pressures, continues to weigh on investor sentiment.
Money Markets Reflect Reduced Rate Cut Expectations
Money markets are currently pricing in a significantly lower probability of rate cuts by the Federal Reserve compared to earlier in the year.
With expectations now at about 38 basis points, down from approximately 150 basis points at the beginning of the year, investors are recalibrating their strategies in response to evolving economic conditions.
