ABM - US Stock Futures Climb On Fed Rate Cut Hopes While Gold Gleams Bitcoin Sputters: What Investors Should Know Ahead Of Thursday's Session | Benzinga
U.S. stock futures indicate a higher opening on Thursday following the market’s two-session losing streak, buoyed by Federal Reserve Chair Jerome Powell’s seemingly dovish commentary. Bond yields are declining as the market anticipates Fed funds rate cuts this year. Investors await further insights from Powell and other Fed officials to clarify the interest rate outlook.
Traders are also monitoring developments surrounding the regional banking crisis after New York Community Bancorp, Inc.‘s (NYSE:NYCB) bailout, along with various job market indicators.
Cues From Wednesday’s Session:
Powell’s comments were interpreted by traders as suggesting potential rate cuts this year, contributing to Wednesday’s market rebound. Major indices opened higher after February’s ADP private payroll data slightly missed expectations. Despite relinquishing some gains before Powell’s prepared speech, stocks reversed course following the Fed chief’s indication of likely rate reductions this year, contingent upon inflation returning to the 2% target.
While indices peaked around mid-session, they later retraced some gains but ultimately closed higher for the day.
Most S&P 500 sector classes closed in positive territory, with consumer staples, IT, and utility stocks leading the gains.
Index Performance (+/-) Value
Nasdaq Composite +0.58% 16,031.54
S&P 500 Index +0.51% 5,104.76
Dow Industrials +0.20% 38,661.05
Russell 2000 +0.70% 2,068.09
Analyst Color:
A Morgan Stanley analyst on Wednesday warned about the perils of a top-heavy market. Stocks of just seven large technology companies, known as the Magnificent 7, currently represent about 30% of the index's total market capitalization, a historically high level, said Morgan Stanley’s Chief Investor Officer Lisa Shalett.
“While there may be room for these high-flying mega-caps to rise even further, their outsized presence in benchmark indices creates risk for investors,” she said. “Should even one of them tumble, it could deal a considerable blow to even a cautious investor's portfolio.”
Outlining the risks stemming from this market concentration, Shalett said all seven companies belong to the same tech sector, ...