Futures Little Changed, Rate Cut Expectations and Nvidia Earnings

U.S. futures showed little movement on Monday as the week began, setting the stage for Nvidia’s earnings report and key inflation data that could further solidify expectations for interest rate cuts in September.

### 1. Futures Steady Amid Record Highs
U.S. stock futures remained relatively unchanged on Monday, with markets lingering near record levels following a clear indication from the Federal Reserve regarding upcoming rate cuts. As of 03:48 ET, the main futures contracts were flat, while the Dow Jones rose by 35 points, or 0.1%. The S&P 500 wrapped up a strong week, closing just under 1% from its all-time high reached in mid-July. This rally followed remarks from Fed Chair Jerome Powell, who stated that “the time has come” to reduce the Fed funds target rate, suggesting that inflationary risks have lessened considerably.

These comments all but guarantee a rate cut during the Federal Reserve’s meeting on September 18, marking the first reduction in over four years.

### 2. Upcoming U.S. Data
This week, the data-dependent Fed will review various economic indicators before making its September rate decision. Key reports include the Commerce Department’s revised second-quarter data and the Personal Consumption Expenditures (PCE) report, which provides the Fed’s preferred measure of inflation. The PCE data, due out Friday, will be closely monitored. Recent comments from Fed officials indicate a shift in focus toward labor market risks, suggesting inflation is near target levels to allow for rate cuts next month. Additional economic reports, including one on consumer confidence, are also scheduled for release later today, along with the weekly jobless claims report on Thursday.

### 3. Nvidia’s Earnings Announcement
The U.S. market rally faces a pivotal moment this week with Nvidia set to release its earnings report after the close on Wednesday. Nvidia’s stock has surged approximately 150% this year, contributing significantly to the S&P 500’s overall gain of 17%. However, the company’s remarkable performance and the current AI hype have raised concerns reminiscent of the dot-com bubble from over two decades ago. The earnings report and guidance regarding future corporate investments in AI could influence market sentiment significantly as we enter a historically turbulent period.

### 4. Rising Oil Prices
Oil prices rose on Monday amid concerns about possible escalations in the Middle East that could disrupt oil supplies. Additionally, the likelihood of imminent U.S. rate cuts has enhanced the global economic outlook and demand for fuel. West Texas Intermediate futures gained 74 cents, or 0.9%, reaching $78.89 a barrel, while Brent futures increased by 75 cents, or 1.0%, to $75.62. Both benchmarks saw over a 2% rise on Friday as expectations of Fed rate cuts grew stronger. However, oil prices remained lower for the week due to a negative outlook for major economies impacting fuel demand. Traders are also cautious regarding OPEC and its allies’ plans to increase output later in the year.

### 5. NASA’s Decision on Astronauts
NASA revealed on Saturday that it deemed it too risky to bring two astronauts stranded on the International Space Station back to Earth using Boeing’s faulty new capsule. Instead, the astronauts will return home in a SpaceX craft in early 2025. Astronauts Butch Wilmore and Sunita Williams have been stranded on the ISS since June after a malfunction during Boeing’s Starliner test flight postponed their expected return. NASA’s choice to proceed with SpaceX raises further concerns for Boeing, which faces intensified scrutiny over safety measures in its commercial aircraft. SpaceX has a contract with NASA to deliver cargo to the ISS and has successfully completed nine missions as of April 2024.