U.S. stock index futures pointed higher on Monday, as investors increased bets on a September interest rate cut by the Federal Reserve after a weaker-than-expected April jobs report.
By 06:06 ET (10:06 GMT), the Dow futures contract had gained 84 points or 0.2%, S&P 500 futures had risen by 13 points or 0.3%, and Nasdaq 100 futures had inched into the green by 41 points or 0.2%.
September rate cut bets rise after payrolls data Softer-than-projected nonfarm payrolls data on Friday ramped up hopes that the labor market was cooling, possibly setting up the Fed for an eventual rate reduction this year.
Traders are now wagering that the central bank will begin trimming rates as soon as September, but still maintained only around a 44% probability of such a scenario, according to the CME Fedwatch tool. Bets had previously seen the initial cut coming in November.
Despite the labor market showing some indications of cooling, inflation still remains well above the Fed’s 2% annual target.
Earlier this month, the Fed acknowledged a lack of progress on battling price pressures, the key focus of a tightening cycle that has pushed rates up to more than two-decade highs. However, Chair Jerome Powell noted that he still believes borrowing costs were heading lower this year and said that it was "unlikely" that the Fed's next move would be to hike rates once again.
Markets will be focused this week on statements from a slew of Fed officials that could offer more cues on interest rates. Federal Open Market Committee members Thomas Barkin and John Williams are set to speak later on Monday.
Wall St nurses April losses, more earnings on tap The employment figures boosted equities to close out the prior week. Some strong earnings also aided sentiment, particularly returns from iPhone-maker Apple (NASDAQ:AAPL), which clocked a smaller-than-expected decline in revenue and profit.
The S&P 500 advanced 1.3% to 5,127.79 points on Friday. The NASDAQ Composite surged nearly 2% to 16,156.33 points, while the Dow Jones Industrial Average rose 1.2% to 38,675.68 points.
Although Wall Street has clocked a strong start to May, it was still nursing steep losses through April that were linked to worries over the prospect of higher for longer interest rates. Even with the payrolls data, investors were seeking more signs that some of the heat is coming out of the U.S. economy.
Meanwhile, quarterly earnings season is set to continue this week, with ride-sharing group Uber Technologies (NYSE:UBER) and entertainment giant Walt Disney (NYSE:DIS) are among the major large-cap companies on tap.
