Stock Futures Rise After Dow’s Biggest Drop in a Year

US stock futures rose on Friday as Wall Street tried to recover Dow’s biggest drop in more than a year.

Futures linked to the S&P 500 (^GSPC) rose about 0.3%, while the tech-heavy Nasdaq Composite (^IXIC) increased at approximately the same rate. The blue-chip Dow Jones Industrial Average (^DJI) put about 0.2%.

Renewed concerns about interest rates fueled Thursday’s rout, led by the Dow’s more than 600-point drop. Meanwhile, U.S. Treasury yields rose again, with the benchmark 10-year yield (^ TNX) hovering close to 4.5%.

A thunderous mood turned sour afterwards US business data stronger than expected led to a rethink of the Federal Reserve’s trajectory in terms of interest rates.

Traders are evenly divided on whether the central bank will cut rates at its September meeting, according to the CME FedWatch Tool. This marks a significant change from a few days ago, when only about a third expected the Fed to hold steady during its first meeting of the fall. Goldman Sachs said on Friday it no longer expects the Fed to make its first cut in July, suggesting instead that September would be more likely.

But Wall Street could enter the holiday weekend in a better mood. Nvidia (NVDA), whose last quarter burst spurred a rally on Thursday, rose another 1% on Friday, hovering around $1,050 per share. Your next stock split could fuel even more interest in retail in your stock.

Highlighting the macroeconomic front Friday is a revised analysis of the University of Michigan consumer sentiment index for May. One Previous readings showed the index plummeted this month as concerns about inflation and interest rates affected Americans’ views on the economy.

Live update1

• Friday, May 24, 2024 at 2:25 pm GMT+2
  

  Where are the minds of investors…

  Some interesting insights into the psyche of investors from the JP Morgan team this morning.

  Its new survey of 850 investors found:

  • The asset class with the highest returns in 2024 is expected to be stocks (51%), with the majority maintaining a slightly bullish view on the S&P 500, expecting the index to be between 5,250-5,750 (55%) at the end of the year.

  • The majority agreed that the Federal Reserve’s next move will be a rate cut (69%), expected at the September meeting (49%).

  • The biggest threat to markets this year has been geopolitical turmoil (cited by 35%) and the resurgence of inflation (32%).

  • On the topic of the US presidential election, investors were almost equally divided between whether the Republican (51%) or Democrat (49%) candidate would win.

  • 30% of respondents expected that a Republican victory would lead to a risk-on environment for markets.

  • 27% thought that a Republican victory would have no material impact on the market.

  • 21% expected a Democratic victory to have no material impact on the market.

Source