U.S. stock index futures rose slightly on Monday following a strong rally in the previous week. This rally was driven by the belief that U.S. interest rates had peaked. Microsoft led the way among megacap stocks, with its shares increasing by 2.4% before the opening bell. The boost came after CEO Satya Nadella announced that Sam Altman, the former head of OpenAI, will join Microsoft to lead a new advanced AI research team. Meanwhile, other megacap stocks had mixed performances, with Nvidia gaining 0.6% and Alphabet slipping 1.1%.
The three main U.S. stock indexes have experienced a remarkable rebound in November, with gains recorded for the third consecutive week. The evidence of easing U.S. inflation has bolstered the belief that the Federal Reserve has finished raising interest rates. As a result, the benchmark S&P 500 is now just 2% away from its highest level this year, which was reached in July.
Traders have nearly priced in the likelihood that the Fed will keep interest rates unchanged in December. Additionally, the odds of at least a 25 basis point rate cut in May are around 60%, according to the CME Group’s FedWatch tool. This has led to a growing confidence that interest rate cuts could be on the horizon. Susannah Streeter, head of money and markets at Hargreaves Lansdown, noted that although there is a “wait and see mood” in the market, there is still quiet confidence that a reduction in interest rates may occur in the spring.
Several key events this week will shape the direction of the markets. Chip designer Nvidia is set to release its quarterly results on Tuesday, marking the end of the third-quarter earnings season for the “Magnificent Seven” group of megacap companies. The Federal Reserve is also expected to release the minutes of its November meeting on Tuesday, with investors eagerly looking for clues on the future direction of U.S. interest rates. Additionally, Black Friday sales will provide insight into the state of U.S. consumer spending.
As of 5:22 a.m. ET, Dow e-minis were up 28 points, S&P 500 e-minis were up 4.5 points, and Nasdaq 100 e-minis were up 28.75 points.
(Reporting by Amruta Khandekar; Editing by Maju Samuel)