US STOCKS-Wall Street set for lower open as investors assess rate path, geopolitical risks
BY Reuters | ECONOMIC | 10/07/24 09:01 AM EDT*
Cboe Volatility index hits over one-month high
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Pfizer
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Oil stocks track crude prices higher
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Futures down: Dow 0.37%, S&P 500 0.38%, Nasdaq 0.49%
By Lisa Pauline Mattackal and Pranav Kashyap
Oct 7 (Reuters) - U.S. stock indexes were on track to open lower on Monday as investors recalibrated their expectations for the Federal Reserve rate cuts this year, while exercising caution amid heightened geopolitical tensions and ahead of key inflation data, policymaker comments and third-quarter earnings. Investors are pricing in an over 88% chance of a 25 basis point rate cut at the Fed meeting in November, according to the CME's FedWatch tool. Just a week ago, markets were hopeful of a second, outsized 50 basis point reduction.
However, a bumper September non-farm payrolls report last Friday pointed to a still-robust jobs market, helping the Dow Jones Industrial Index notch a record closing high.
U.S. Treasury yields rallied as investors reassesed the Fed's rate path, with the yield on benchmark 10-year notes exceeding 4% for the first time in two months.
The rise in yields pressured rate-sensitive megacap growth
stocks. Alphabet fell 0.5% and Microsoft
The CBOE Volatility index, Wall Street's fear gauge, rose as high as 21.45, at its highest level in over one month.
But crude prices extended gains on concerns about supply
disruptions from the Middle East conflict, boosting shares of
oil companies. Exxon Mobil
U.S. S&P 500 E-minis were down 21.75 points, or 0.38%, Nasdaq 100 E-minis were down 99.75 points, or 0.49%, Dow E-minis were down 156 points, or 0.37%
Futures for the small-cap Russell 2000 index slipped 0.3%.
While markets continue to fine tune its expectations for interest rate cuts, most market watchers remain optimistic about the underlying strength of the economy and outlook for equities. Goldman Sachs raised its 2024 year-end S&P 500 target to 6,000 from 5,600, and also lowered its odds of a U.S. economic recession to 15% from 20%.
The consumer price index data, this week's most closely watched data, is due on Thursday.
Several Fed officials are also slated to speak this week, with comments expected from Michelle Bowman, Neel Kashkari, Raphael Bostic and Alberto Musalem later on Monday.
Third-quarter earnings for S&P 500 companies also begin this week, with several major banks scheduled to report on Oct. 11.
Earnings will be a significant test for Wall Street's rally this year - the S&P 500 is up about 20% year-to-date and stands near record highs. (Reporting by Lisa Mattackal and Pranav Kashyap in Bengaluru; Editing by Shinjini Ganguli)