(Reuters) – Futures on Wall Street’s main indexes were muted on Tuesday, as investors braced for a crucial jobs report to gauge the U.S. labor market’s strength, and awaited high-profile tech earnings for clues on whether megacaps could sustain a recent rally.
With the U.S. Federal Reserve kicking off its two-day policy meeting later in the day, all eyes will be on the Labor Department’s JOLTS report at 10 a.m. ET, which is expected to show job openings fell to 8.750 million in December.
Investors will closely monitor the Fed’s policy decision on Wednesday for any clues on when the U.S. central bank could start interest-rate cuts. The Fed is widely expected to leave the key benchmark rate unchanged at 5.25% to 5.50%.
“The Fed is very likely to cut short-term rates in May or June in response to PCE Core plunging very close to its arbitrary 2% target,” Infrastructure Capital Advisors CEO Jay Hatfield said in a note.
Hatfield expects long-term global interest rates to rapidly decline due to rate cuts across major central banks, and propel both stock and bond prices.
While hopes of nearing rate cuts have supported a steep ascent in megacaps, quarterly company earnings will be key in rationalizing the rich valuations of the momentum stocks after Tesla and Intel disappointed investors with bleak forecasts last week.
Alphabet and Microsoft will be detailing their reports after market close, with the latter expected to post its best revenue growth in nearly two years on strong demand for cloud services as adoption of its generative AI-infused products rises.
Alphabet was up 0.2% and Microsoft 0.9% in premarket trading.
Earnings from other major companies including Pfizer, United Parcel Service, Marathon Petroleum, General Motors and JetBlue Airways are also lined up for the day.
Recent gains in megacaps and chip stocks have helped the benchmark S&P 500 notch several new records, including another intraday record of 4,929.31 points on Monday, following a double-digit rally seen in the final two months of 2023.
While BlackRock raised its overall U.S. stocks view to “overweight” from “neutral” on Monday, Citigroup lowered its mid-2024 S&P 500 target to 4,800 points from 5,000 points, allowing for economic softening during the first half.
At 5:27 a.m. ET, Dow e-minis were down 48 points, or 0.12%, S&P 500 e-minis were down 2.75 points, or 0.06%, and Nasdaq 100 e-minis were up 3.75 points, or 0.02%.
Further on the earnings front, Super Micro Computer jumped 10.5%, after the server seller projected stronger-than-expected quarterly sales, set to extend its recent AI-fueled rally.
Cloud services provider Calix dropped 21.3% after forecasting its first-quarter revenue below estimates.
(Reporting by Ankika Biswas in Bengaluru; Editing by Shinjini Ganguli)
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