Following a surge last week fueled by speculation that US interest rates had peaked, U.S. stock index futures edged higher on Monday. Microsoft outperformed its megacap competitors with the announcement that Sam Altman, the former president of OpenAI, would be joining the software behemoth.
Before the bell, Microsoft’s stock increased 2.4% as CEO Satya Nadella announced that Altman will be joining the company to head a new advanced AI research division.
Alphabet fell 1.1% and Nvidia edged up 0.6%, while other megacap stocks were divided.
The three major U.S. market indexes have seen a remarkable comeback in November. On Friday, they reported increases for the third consecutive week, bolstering speculation that the Federal Reserve was finished hiking interest rates. This was due to signs of slowing U.S. inflation.
Merely 2% separates the benchmark S&P 500 from its highest point of the year, which was attained in July.
According to the CME Group’s FedWatch tool, traders have almost fully priced in the possibility that the Fed would maintain interest rates in December. The odds of a rate decrease of at least 25 basis points in May are also rather high, at almost 60%.
“Although there is now a “wait and see” attitude, there is still a quiet sense of confidence that interest rate cuts may be imminent,” according to a report from Susannah Streeter, head of money and markets at Hargreaves Lansdown.
More money is being staked on the possibility that the Fed will reduce rates in the spring as worries of another Grinch-like boost in December have faded.” This week’s market mood will be determined by a variety of factors.
The “Magnificent Seven” group of megacap corporations will conclude its third-quarter earnings season on Tuesday when chip designer Nvidia releases its quarterly results. On Tuesday, the Fed is anticipated to release the minutes from its November meeting, which will be examined for hints on the future path of interest rates in the US. The Black Friday sales will serve as a barometer for the status of American consumer expenditure.