U.S. stock futures indicated a cautious start to the week, with both S&P 500 and Nasdaq 100 contracts trading lower on Monday morning. Investors are turning their attention to upcoming remarks from Federal Reserve officials and a key inflation report, seeking new direction after major indexes reached record highs in the previous session.
The market is bracing for a week filled with significant economic data, including the personal consumption expenditures (PCE) price index, the Federal Reserve's preferred measure of inflation. This data will be critical in shaping expectations for future monetary policy.
Key Takeaways
- U.S. stock futures are down, with S&P 500 E-Mini futures at -0.30% and Nasdaq 100 E-Mini futures at -0.35%.
- Investors are focused on upcoming economic data, particularly the August core PCE price index, and speeches from Fed officials.
- Major indices including the S&P 500, Dow, and Nasdaq 100 closed at record highs in the previous trading session.
- Global markets show a mixed picture, with European stocks declining while Asian markets finished higher.
Market Awaits Fresh Catalysts After Record Highs
Wall Street's major equity averages concluded the prior week on a strong note, with the S&P 500, Dow Jones Industrial Average, and Nasdaq 100 all setting new closing records. The rally was broad, with significant gains seen in technology giants.
Apple (AAPL) shares rose by over 3%, and Tesla (TSLA) saw an increase of more than 2%. Another notable gainer was Oracle (ORCL), which climbed over 4% following a report that it was in discussions with Meta Platforms for a substantial cloud computing agreement valued at approximately $20 billion.
Logistics company FedEx (FDX) also advanced more than 2% after reporting first-quarter financial results that surpassed expectations and reinstating its full-year guidance. However, not all sectors performed well. Homebuilder Lennar (LEN) experienced a decline of over 4% after its third-quarter results and fourth-quarter home delivery forecast fell short of analyst projections.
Market Sentiment and Rate Cut Expectations
Analysts suggest that a non-recessionary environment combined with a Federal Reserve easing cycle has historically been supportive for stocks. "We see further gains underpinned by AI, earnings, and consumption," noted Ulrike Hoffmann-Burchardi at UBS Global Wealth Management. Current market pricing reflects this optimism, with U.S. rate futures indicating a 91.9% probability of a 25 basis point rate cut at the Fed's October meeting.
Federal Reserve and Economic Data in Focus
This week's trading will be heavily influenced by commentary from central bank officials and a series of important economic releases. Federal Reserve Chair Jerome Powell is scheduled to deliver a speech on the economic outlook on Tuesday, which will be closely watched for any hints about future policy direction.
Numerous other Fed officials are also slated to speak throughout the week, including Williams, Barkin, Musalem, and Daly. Their collective remarks will provide a comprehensive view of the central bank's current thinking. Minneapolis Fed President Neel Kashkari recently stated his support for the last rate cut and indicated he anticipates two more cuts this year.
Key U.S. Economic Releases This Week
- Core PCE Price Index: The Fed's preferred inflation gauge for August.
- Purchasing Managers' Surveys: Preliminary September data for manufacturing and services.
- GDP (Third Estimate): Final look at economic growth for the previous quarter.
- Housing Data: Reports on New Home Sales and Existing Home Sales.
- Consumer Data: Personal Income, Personal Spending, and the University of Michigan Consumer Sentiment Index.
The core PCE data is particularly significant. Investors will analyze the report to gauge the impact of tariffs on inflation. If the data suggests a limited effect, it could strengthen the case for additional interest rate reductions from the Federal Reserve.
Global Market Performance Shows Divergence
European Markets Open Lower
European stocks started the week on a negative note, with the Euro Stoxx 50 Index falling by 0.62%. The automotive sector led the declines after luxury carmaker Porsche (P911.D.DX) reduced its 2025 profit guidance, citing a slower-than-expected rollout of electric vehicles due to weaker demand. The stock fell over 7%.
Airline stocks also faced pressure after a series of cyberattacks on major European airports led to flight cancellations. In corporate news, Dutch geo-data company Fugro (FUR.NA) saw its shares drop more than 9% after it withdrew its full-year financial guidance.
Asian Markets End on a Positive Note
In contrast, Asian stock markets closed higher on Monday. China’s Shanghai Composite Index (SHCOMP) gained 0.22%, while Japan’s Nikkei 225 Stock Index (NIK) rose by 0.99%.
Chinese markets were buoyed by optimism following a phone call between U.S. President Donald Trump and Chinese leader Xi Jinping. President Trump reported progress on several issues and confirmed plans to meet with President Xi next month. Homin Lee, a senior macro strategist at Lombard Odier, commented, "The Trump-Xi phone call keeps momentum toward additional deals from their in-person summit."
In Japan, the Nikkei 225 rebounded from previous losses. Concerns eased over the Bank of Japan's plan to sell its holdings of exchange-traded funds (ETFs). The central bank announced it would sell its ETF holdings at a pace of about 620 billion yen per year, a rate that analysts believe will have a limited impact on the market.
"Investors overreacted to the BOJ’s announcement. And today, the market is rebounding," said Seiichi Suzuki, chief equity market analyst at Tokai Tokyo Intelligence Laboratory.
Pre-Market Movers and Corporate Earnings
Several individual stocks are showing significant movement in pre-market trading. Cryptocurrency-related stocks are trading lower as the price of Bitcoin declined by over 2%. MicroStrategy (MSTR), Marathon Digital (MARA), and Coinbase (COIN) were all down more than 3%.
Other notable movers include:
- Kenvue (KVUE): The stock fell more than 4% following a report that the Trump administration plans to link an ingredient in Tylenol to autism.
- Metsera (MTSR): Shares surged approximately 60% on reports that Pfizer is nearing a potential $7.3 billion acquisition of the company.
- ASML Holding N.V. (ASML): The stock rose over 3% after Morgan Stanley upgraded its rating to Overweight.
Investors will also be monitoring quarterly earnings reports from several companies this week, including Micron Technology (MU), Costco (COST), and Accenture (ACN).
