U.S. stock index futures climbed on Tuesday as investors showed optimism that the economy may achieve a "soft landing" scenario. This comes amid strong economic data and a major stimulus package announced by China, which injected fresh liquidity into the global financial markets. The idea of a goldilocks economy, where growth remains robust while inflation and unemployment stay in check, provided a bullish outlook, pushing up S&P 500, Dow, and Nasdaq futures.

Economic Optimism:

The S&P 500 and Dow Jones Industrial Average both closed at record highs in the previous session, largely driven by a survey that indicated steady business activity across the United States. This alleviated worries of an impending recession, while policymakers continued to support a dovish stance on Federal Reserve policy.

Treasury Yields and Fed Outlook:

While the stock market rally has been a key focus, longer-dated Treasury bond yields also edged higher as traders priced in a greater likelihood of the economy achieving growth with low inflation. Investors are now evaluating how the Federal Reserve will respond, especially in light of comments from Atlanta Fed President Raphael Bostic about inflation progress and a cooling labor market.

Markets now await a key speech from Federal Reserve Governor Michelle Bowman later in the day. Bowman had previously voted for a 25 basis point rate reduction, signaling her view that persistent price pressures warranted only a smaller rate cut compared to the 50 basis point cut the Fed delivered last week. This decision has left markets uncertain, with the CME Group’s FedWatch Tool showing that traders are divided on whether the next cut in November will be 25 or 50 bps.

Key Data and Indicators:

Investors are now keenly watching the consumer confidence survey due at 10:00 a.m. ET, which is expected to show improvement from August. However, the main focus will be on Friday's Personal Consumption Expenditure (PCE) report, the Fed's preferred inflation gauge, which could heavily influence the direction of U.S. monetary policy.

Premarket Movers:

Among premarket activity, U.S.-listed shares of Chinese firms such as Alibaba, PDD Holdings, and Li Auto surged, gaining 5% and 7.3% respectively. This rally followed China's biggest stimulus package since the pandemic, aimed at pulling the economy out of a deflationary funk. The People’s Bank of China has introduced multiple measures to boost liquidity and economic growth, which has had a ripple effect on global financial markets.

The upbeat mood also positively affected copper miners such as Freeport-McMoRan, Southern Copper, and U.S.-listed shares of Rio Tinto, all of which jumped over 4.6% as copper prices surged due to demand optimism from China.

On the other hand, Visa dropped 1.6% after reports surfaced about a potential lawsuit from the U.S. Department of Justice, accusing the payment operator of monopolizing the country's debit card market.

Meanwhile, Starbucks shares slipped 2% following a downgrade by Jefferies to "underperform" from "hold." In contrast, Salesforce saw a 2.1% uptick after Piper Sandler upgraded the company to "overweight" from "neutral," reflecting optimism around its future growth trajectory.

Takeaways:

U.S. stock futures are trending higher, with investors optimistic about the economy’s potential for a "soft landing."

China's stimulus package lifted sentiment, driving gains in both Chinese firms and base metal stocks like copper miners.

Focus remains on the Federal Reserve’s policy and upcoming economic data, especially the PCE report later this week.

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