Market Snapshot: U.S. stock futures set for modest gains as investors wait for pivotal data

What’s driving markets

Investors were set to pick up where they left off Friday, when stocks gained after Powell said the jury was still out on whether inflation and a strong U.S. economy needed to be tempered, but that monetary policy would proceed cautiously.

Jackson Hole recap: Fed rate hikes likely on hold for ‘several meetings’

“In the end, it did not change the needle much,” Allan von Mehren, chief analyst at Dankse Bank, said in a note to clients. “Those believing in a Fed pivot early next year still have arguments to do so, and vice versa. Hence, equities finally rose with U.S. equities particularly strong.”

“More importantly, Powell did not say anything to hinder investor appetite for large cap growth stocks. Consumer discretionary and tech outperformed, large cap outperformed small cap and growth were generally preferred over value,” said von Mehren.

See: Fed’s Powell left investors with a cloud of uncertainty, and the U.S. stock market faces a difficult week ahead

Powell, however, kept the possibility of further rate hikes “firmly on the table during his Jackson Hole speech, as inflation still remains above its 2% target, and the central bank is committed to that target,” said Rod von Lipsey, managing director at UBS Private Wealth Management, in emailed comments.

“This week’s core PCE figures and the next CPI report in mid-September will be of extra importance in gauging how the Fed may act at its late September meeting,” he said. “Based on the Fed’s continued commitment to curtailing inflation, we believe that the market has been overly optimistic about the end point of restrictive policy rates.”

The central bank will be paying close attention to the data set to be released, with its preferred inflation measure, the July personal consumption expenditure index, due on Thursday, followed by August payroll data on Friday.

The month of August is also winding down, with the S&P 500 down 3.9% and poised for its first monthly loss since February, as the summer has seen the 2023 rally for stocks stall amid a cooling of tech stocks. Down over 5% for August so far, the Nasdaq Composite is also set for its first monthly loss since February.

Elsewhere, Treasury yields BX:TMUBMUSD10Y were softer with that of the 10-year note down 1 basis point to 4.222%.

In China, stocks climbed after the Finance Ministry and the country’s stock market regulator rolled out measures to spark buying interest in stocks, such as a halving of a tax on stock trades and limiting sales by big shareholders in companies that haven’t handed out enough dividends.

China’s CSI 300 XX:000300 climbed more than 1%, though shares of indebted property developer China Evergrande Group EGRNF, +900.00% tumbled 78% in Hong Kong after a return to trading after more than a year.

Companies in focus

• Shares of Dow component 3M Co. MMM, +0.46% rose 4.6% in premarket trading after The Wall Street Journal reported that the multinational conglomerate was nearing agreement on a $5.5 billion plan to settle more than 300,000 lawsuits over defective military earplugs.
• Shares of Rite Aid Corp. RAD, -51.04% fell 3.6% following the worst one-day performance ever for shares on Friday following a report in The Wall Street Journal that the drugstore chain was preparing a Chapter 11 bankruptcy filing to address mass federal and state lawsuits that resulted from its alleged role in the sale of opioids.