US stock futures moved higher on Wednesday, with techs vaulting back from a steep sell-off as investors waited to discover whether Federal Reserve Chair Jerome Powell is still cautious about a pivot on interest rates.
Futures on the Nasdaq 100 (^NDX) jumped roughly 0.7%, after techs led a sharp slide in stocks more broadly on Tuesday. S&P 500 (^GSPC) futures added 0.4% and Dow Jones Industrial Average (^DJI) futures put on 0.2%, both coming off losses of more than 1%.
Powell’s testimony to Congress later may provide a catalyst for stocks, which have logged two days of losses as a battering for “Magnificent Seven” stalwarts Apple (AAPL) and Tesla (TSLA) fueled bubble fears.
Investors will listen closely for any deviation by Powell from Fed policymakers’ much-repeated message that there’s no rush to cut interest rates. He’s expected to cover whether borrowing costs are likely to stay higher for longer and when a “soft landing” might happen — high-stakes topic in an election year with voters unhappy about the economy. His two-day testimony starts at 10 a.m. ET with a hearing in the House.
In individual stocks, CrowdStrike (CRWD) shares continued their post-earnings rally, up over 23% in premarket after the cybersecurity company’s outlook signaled healthy demand in the sector. Other cybersecurity stocks gained in its wake, including an almost 4% gain for Zscaler (ZS).
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Bring on Jerome Powell
Just to level set you in case you haven’t gotten there already.
The year may end with no interest rate cuts as opposed to the six some on the Street expected in early January. It is interesting to see markets still rocking as expectations on rates have come in. Good to see investors embrace good economic data!
It’s likely you will hear the Fed’s Jerome Powell continue the drumbeat of recent Fedspeak on rates in his testimony to lawmakers today.
For Goldman Sachs economists, 2024 is now shaping up to be the year of rate cuts…everywhere else.
“The major DM [developed market] central banks will cut for at least three consecutive meetings starting in June, continue to cut consecutively in economies like the Euro Area and UK where growth remains below trend, but slow down in economies like the US where activity remains resilient,” said Goldman’s chief economist Jan Hatzius.
And that raises the question: is it time to rotate into European stocks from more expensive US equities?
Goldman sees a faster pace of rate cuts in markets outside the US. (Goldman Sachs)
