As the week draws to a close, stock futures exhibited minimal movement early Friday following a positive rally that led the S&P 500 and Nasdaq to recover from this month’s market fluctuations. This surge has paved the way for the major indexes to potentially achieve their best week of the year.
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Market Activity:
- Around 7:15 a.m. ET, futures on the Dow (YM=F), S&P 500 (EN=F), and Nasdaq (NQ=F) experienced a slight drop of approximately 0.1%.
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Market Outlook:
- US investors are anticipating a relatively calmer day, with the upcoming data release of the University of Michigan’s consumer sentiment report capturing the primary focus. Thursday witnessed significant gains driven by encouraging figures on US consumer activity, including monthly retail sales and Walmart’s quarterly earnings report.
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Consumer Sentiment:
- Walmart’s CFO emphasized the resilience of consumer spending, indicating a consistent performance throughout the second quarter. This stability has dispelled concerns of an economic downturn triggered by the earlier stock market turbulence.
- Federal Reserve Expectations:
- Investor sentiment has shifted, leading to a reduction in expectations of aggressive rate cuts by the Federal Reserve. Current data reveals a 66% probability of a 0.25% rate cut in the upcoming month, with a 33% likelihood of a 0.50% cut. Conversely, during the market’s tumultuous phase last week, a half-point reduction seemed increasingly probable.
As the markets await further insights, all eyes will be on the upcoming address by Fed Chair Jay Powell at the annual Jackson Hole Symposium next Friday. This event is poised to provide a significant update on the Federal Reserve’s future decisions regarding interest rates. The positive momentum in the market, coupled with robust consumer sentiment, signals a potential upward trajectory for investors as uncertainties begin to recede.
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