Wall St poised for muted open ahead of data-filled week

WASHINGTON: Wall Street's main stock indexes were on course for a subdued start on Monday following a strong close to the previous week, with focus on a slew of economic data points which could clear out some uncertainty on the outlook for interest rate cuts. The latest milestone in a four-month rally among Wall Street's main indexes was the S&P 500 closing above the psychological 5,000-point level on Friday, while the Nasdaq briefly surpassed the 16,000 mark, bringing it closer to its all-time high hit in November 2021.

Much of the frenzy has been led by megacaps with greater exposure to artificial intelligence, aided further by hopes of imminent rate cuts and upbeat outlook from businesses. LSEG data showed S&P 500 firms expect earnings to rise by 9.7% this year. "We are at hefty levels and the real question out there is how much longer can this market continue to rally without any new serious catalyst on the way," said Peter Cardillo, chief market economist at Spartan Capital Securities.

"We'll begin to shift towards the macro news with CPI that could set the stage whether the market continues to rally." Traders await January's Consumer Price Index (CPI), due on Tuesday, to determine what could be the timeline for monetary policy easing this year. Other data through the week also include producer price index (PPI), industrial production, retail sales, housing numbers and preliminary University of Michigan consumer sentiment.

With growing data reflecting a robust economy, central bankers have effectively been able to push back against traders' expectations for early rate cuts. The odds for at least a 25-basis-point rate reduction in May have dropped to 61%, from over 95% at the start of 2024, as per the CME FedWatch Tool. Remarks from Federal Reserve officials including Governor Michelle Bowman, Richmond President Thomas Barkin and Minneapolis chief Neel Kashkari, scheduled through the day, will be scrutinized for any hints on the timing for rate cuts.

At 8:44 a.m. ET, Dow e-minis were down 51 points, or 0.13%, S&P 500 e-minis were down 2 points, or 0.04%, and Nasdaq 100 e-minis were down 8.75 points, or 0.05%. On the quarterly earnings front, Trimble shed 6.5% in premarket trading after the GPS navigation products maker forecast annual revenue below Street estimates.

Citigroup slipped 1% after Reuters reported U.S. regulators have asked the lender for urgent changes to how it measures default risk of trading partners and its own auditors have found a plan to improve internal oversight to be lacking. B Riley Financial lost 2.4%. A report said the bank's loans to Brian Kahn, former CEO of Franchise Group who is accused of securities fraud, date back longer than previously known.

Applied Digital shed 3.3% after saying revenue from its Ellendale data center hosting facility would take a hit in the current quarter by an ongoing power outage. Diamondback Energy rose 2.6% after announcing a deal to buy the largest privately held oil and gas producer in the Permian basin, Endeavor Energy Partners, for $26 billion.

Joby Aviation gained 7.6% as the electric-powered aircraft maker signed an agreement to launch air taxi services in the Emirate by early 2026.