Lisa Pauline Mattakal and Johann M. Cherian
(Reuters) – Wall Street was expected to open flat on Monday as investors retreated ahead of key inflation data and a Federal Reserve meeting scheduled for this week, looking for hints about the central bank’s stance on policy easing this year.
After a tumultuous week, indexes closed slightly lower on Friday after mixed data showed that while May non-farm payrolls were much stronger than expected, unemployment rose and household surveys showed signs of economic weakness.
“Investors were hoping for a more polarized data set, but instead the rise in jobless numbers as opposed to actual jobs added is confusing a lot of people, making the Fed’s job more difficult,” Peter Andersen said. Founder of Andersen Capital Management.
Attention now turns to CPI inflation data for May on Wednesday, as well as the end of the Fed’s two-day meeting, where the central bank is expected to keep interest rates steady.
Markets lowered expectations for a Fed rate cut in September following Friday’s data, with pricing now reflecting a less than 50% chance of a cut. Expectations rose 69% last week.
Traders also lowered their expectations for the extent of easing this year, with prices implying just one cut compared with two before the wages data, according to LSEG data.
“Currently, interest rates are in what I would call an equilibrium state, and they are ideal for a growing, stable economy. I would caution the Fed against making any changes at this stage,” Andersen said.
Despite rising expectations for a rate cut, all three major indexes ended the week higher, with the week’s gains led by a nearly 4% gain in the information technology sector, which has driven Wall Street’s recent rally behind stocks like chip maker Nvidia (NASDAQ : ), seen as a strong bet on AI, have risen sharply.
Nvidia shares fell 0.2% in pre-market trading following a 10-for-one stock split that took effect after markets closed Friday, sparking speculation about its chances of inclusion in the Dow Jones Industrial Average.
This week will also see the release of May Producer Price Index data and the first release of the University of Michigan Consumer Sentiment Survey.
At 8:21 a.m. ET, they were down 15 points, or 0.04%, down 1.25 points, or 0.02%, and down 4 points, or 0.02%.
Apple (NASDAQ:) shares added 0.4% as investors awaited the company’s annual developer conference to learn how the company is integrating artificial intelligence into its offerings.
Southwest Airlines (NYSE:) shares jumped 7.8% after it reported that activist investor Elliott Investment Management had amassed a nearly $2 billion position in the company.
Shares of CrowdStrike (NASDAQ:), KKR & Co (NYSE:) and GoDaddy (N:) rose 2.9% to 7.9% after S&P Dow Jones Indices said the companies will be included in the S&P 500 index from 24 June.
Diamond Offshore Drilling stocks (OTC:) gained 8.0% after oil services company Noble said it would buy a smaller rival for $1.59 billion.
Advanced Micro Devices (NASDAQ:) shares fell 2.6% after Morgan Stanley downgraded the chip stock to “equal weight” from “overweight.”