Stock futures traded slightly higher on Sunday evening, buoyed by growing hopes for lower interest rates, which contributed to a positive week on Wall Street. The Dow Jones Industrial Average futures increased by 0.09%, while the S&P 500 futures and the Nasdaq 100 futures rose by 0.11% and 0.18%, respectively. This uptick in futures comes on the heels of the three major indices achieving their second consecutive week of gains.
During the past week, the Dow experienced a notable climb of 1.7%, and the S&P 500 and Nasdaq Composite followed suit with increases of 0.9% and 0.8%, respectively. This marks the fourth week of gains for both the S&P 500 and Nasdaq in the last five weeks. Notably, small-cap stocks outperformed their larger counterparts, surging over 3% as investors anticipated forthcoming rate cuts from the Federal Reserve.
Investment strategist Ross Mayfield from Baird Private Wealth Management highlighted that the S&P 500 Equal Weight Consumer Discretionary index reached an all-time high, suggesting that concerns about tariff-driven economic issues may be overstated. He noted in a recent analysis that the market sentiment appears quite positive, raising questions about the prevailing narrative concerning a weakening U.S. consumer and the potential for stagflation.
This week, the focus will remain on the Federal Reserve as its members gather in Jackson Hole, Wyoming for the annual economic policy symposium. Investors will be closely watching this event for insights into the future trajectory of interest rates. According to the CME's FedWatch tool, the futures market is pricing in nearly an 85% chance that the central bank will cut rates at its next policy meeting in September.
In addition to economic policy discussions, traders will also keep an eye on the earnings reports scheduled for release this week as the earnings season begins to wind down. Major big-box retailers such as Home Depot, Lowe's, Walmart, and Target are among the significant companies set to announce their results. Remarkably, of the more than 92% of S&P 500 companies that have reported earnings this quarter, nearly 82% have exceeded Wall Street's expectations, according to data from FactSet.
