Wall Street Futures Stable After Nvidia Record Highs and Rate Cut Speculation

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Wall Street Futures Stabilize Amid Record Nvidia Surge and Rate Cut Hopes

Team FS

06/Jun/2024

Key Points:

1: Wall Street futures stabilize after Nvidia's record-breaking surge and speculation over rate cuts amidst weak labor market data.

2: Lululemon jumps premarket on stronger-than-expected earnings, while Five Below slides on disappointing forecast.

3: Crude oil prices edge higher but are on course for weekly losses due to OPEC+ decision and unexpected increase in US crude stocks.

U.S. stock index futures traded in tight ranges on Thursday, stabilizing after a rally in heavyweight Nvidia propelled Wall Street to record highs in the previous session. At 06:25 ET (10:25 GMT), Dow Jones Futures fell 30 points, or 0.1%, S&P 500 Futures fell just 1 point, or 0.1%, while Nasdaq 100 Futures rose 7 points or 0.1%. Nvidia surged to a record high on Wednesday, crossing $3 trillion in valuation and overtaking Apple as the second-largest company on Wall Street amid growing hype over its exposure to artificial intelligence.

Rate Cut Speculation Amidst Cooling Labor Market

A series of weak labor market readings drummed up hopes that the Federal Reserve will begin cutting rates by September. Weak ADP private payrolls data, coupled with a softer-than-expected reading on job openings, fueled bets that the labor market was cooling, which could lead to softer inflation and give the Federal Reserve more impetus to cut interest rates. Traders ramped up bets that the Fed will cut rates by 25 basis points in September. Additionally, a rate cut by the Bank of Canada on Wednesday and the European Central Bank's widely expected cut further fueled optimism over looser monetary policy.

Earnings Reports Impacting Market Sentiment

Focus also remained on earnings reports, with sportswear retailer Lululemon Athletica jumping almost 8% premarket after reporting stronger-than-expected quarterly earnings and raising its annual guidance. On the flip side, discount retailer Five Below slid 16% after posting a disappointing forecast for full-year earnings.

Crude Oil Prices and Market Reaction

Crude prices edged higher Thursday, buoyed by the overall positive sentiment, but were still on course for hefty weekly losses. U.S. crude futures (WTI) traded 0.4% higher at $74.36 per barrel, while the Brent contract climbed 0.3% to $78.61 a barrel. Both contracts were headed for weekly declines of around 4%, weighed down by the decision from the Organization of the Petroleum Exporting Countries and its allies to gradually unwind voluntary output cuts, beginning in October. The crude market was further impacted by the news that U.S. crude stocks jumped by 1.2 million barrels in the week to May 31, compared with estimates for a draw of 2.3 million barrels, according to data from the U.S. Energy Information Administration.

In conclusion, the stability in U.S. stock futures after Nvidia's surge indicates cautious optimism among investors, with attention now turning to the potential for a rate cut by the Federal Reserve amidst cooling labor market data. Earnings reports from companies like Lululemon and Five Below also play a significant role in shaping market sentiment, while crude oil prices remain volatile amidst global supply dynamics.

Also Read : Indian Stock Market Bounces Back Strongly Post-Election Turbulence

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Wall Street Futures Stabilize Amid Record Nvidia Surge and Rate Cut Hopes

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