SPX

US STOCKS-Wall St set for muted open ahead of busy data week, inflation test

Credit: REUTERS/LUCAS JACKSON

By Amruta Khandekar and Bansari Mayur Kamdar

Feb 26 (Reuters) - Wall Street was set for a subdued open on Monday after a scorching AI-led rally, as investors focus returned to potential rate cuts from the Federal Reserve that key inflation and other economic data 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 .SPX and the Dow Jones industrials .DJI both notched all-time highs last week, while the tech-heavy Nasdaq .IXIC came within a close range of its record intraday peak hit in November 2021.

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

"The PCE price inflation index (is) expected to show a little bit more inflation, in line with the numbers that we saw with the CPI and PPI, so the markets are bracing for that," said Peter Cardillo, chief market economist at Spartan Capital Securities.

"In the near term, there's a distinct possibility that we're going to see (Treasury) yields move a bit higher."

Higher Treasury yields weigh on equity valuations as they make the returns on stocks less appealing and also increase the cost of capital for businesses.

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

At 8:21 a.m. ET, Dow e-minis 1YMcv1 were down 16 points, or 0.04%, S&P 500 e-minis EScv1 were down 0.75 points, or 0.01%, and Nasdaq 100 e-minis NQcv1 were up 11.25 points, or 0.06%.

Megacap growth stocks were mixed in premarket trading on Monday, though Nvidia NVDA.O continued to outperform with an advance of 1.1% after hitting $2 trillion in market value for the first time on Friday.

Micron Technology MU.O gained 4.6% as it began volume production of semiconductors that will be used by Nvidia's AI chip.

Warren Buffett's Berkshire Hathaway BRKb.N rose 1.9% after the conglomerate on Saturday posted its second straight record annual operating profit on a boost from its insurance business.

Domino's Pizza DPZ.N jumped 5.0% 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.

Shares of Moderna MRNA.O slid 1.8% as HSBC downgraded the U.S. vaccine maker to "reduce" from "hold."

Intuitive Machines LUNR.O slumped 24.9% after the company said its spacecraft had tipped over shortly after touching down on the lunar surface.

Dow Jones whiskers away from 40,000 mark https://tmsnrt.rs/3wux3VX

Nasdaq leads Wall Street gains as AI companies rally https://tmsnrt.rs/42PRhpb

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

((Amruta.Khandekar@thomsonreuters.com;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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