(Reuters) – Nasdaq futures jumped on Thursday as technology heavyweights rose, boosted by largely unchanged bets that the Federal Reserve will cut interest rates in September, even though the central bank forecasts just one cut this year.
Investor sentiment was boosted by softer-than-expected inflation data and Fed Chairman Jerome Powell’s acknowledgment that progress had been made in tackling price pressures.
Although markets have cut rates at the start of the rate cut in September, they still expect there to be a greater than 60% chance of it happening, according to the FedWatch CME tool. Interest rate traders are forecasting a decline of nearly two basis points at 25 basis points, according to LSEG data.
“Ultimately, whether there are one or two rate cuts this year matters much less than the overall path of interest rates, the FOMC remains entirely dependent on the data, but it recognizes that policy must stop being restrictive before it hurts the economy “, said Paolo. Zangieri, senior economist at Generali (BIT:) Investments.
“We don’t think this meeting precludes our expectation of two rate cuts this year,” Zangieri said.
U.S. Treasury yields fell on Wednesday, helping indexes and the Nasdaq close at record highs, although they pared gains from earlier in the session.
May Producer Price Index data and weekly jobless claims data will be released before markets open on Thursday, with New York Fed President John Williams moderating the discussion later in the day.
Tech stocks continued their gains in premarket trading, with Broadcom (NASDAQ:) rising 13.5% after the company raised revenue forecasts for chips used for artificial intelligence operations and announced a 10-for-1 forward stock split.
Peer Nvidia (NASDAQ:) rose 2.1%, although fellow mega-cap stocks Amazon (NASDAQ:), Meta Platforms (NASDAQ:) and Alphabet (NASDAQ:) fell between 0.4% and 0.6%. .
Strong gains in several large-cap technology stocks and expectations of a soft landing for the economy have been key factors in the strong gains in the S&P 500 and Nasdaq indexes this year.
rose on Thursday but fell after the blue-chip index closed virtually unchanged in the previous session.
Futures for more economically sensitive small-cap stocks also fell 0.5% after the index posted its best day in more than a month on Wednesday.
Apple (NASDAQ:) shares rose 0.2%, aiming to reclaim the title of the world’s most valuable company from Microsoft (NASDAQ:) if the trend continues.
At 5:40 a.m. ET, the Dow e-mini was down 119 points, or 0.31%, up 2.75 points, or 0.05%, and up 100.25 points, or 0.51%. .
Meanwhile, Tesla (NASDAQ:) shares jumped 5% after Elon Musk said company shareholders voted to approve his $56 billion pay package and move the electric car maker’s legal home to Texas.
Virgin Galactic shares fell 7.8% the day after announcing a 1-for-20 reverse stock split.