Futures higher, Fed speakers this week - what's moving markets

Investing.com -- U.S. stock futures point higher to begin the new trading week as many investors bring forward their projections for Federal Reserve interest rate cuts this year following softer-than-anticipated April employment data. Fed speakers in the coming days are expected to provide more clues into the outlook for borrowing costs in the U.S. Meanwhile, Walt Disney (NYSE:DIS) and Wynn Resorts (NASDAQ:WYNN) make up some of the biggest corporate names set to report their latest quarterly earnings this week.

1. Futures higher

U.S. stock futures ticked higher on Monday, with traders assessing the possibility of Federal Reserve interest rate cuts later this year following the jobs report for last month.

By 03:23 ET (07:23 GMT), the Dow futures contract had gained 51 points or 0.1%, S&P 500 futures had risen by 8 points or 0.2%, and Nasdaq 100 futures had inched into the green by 22 points or 0.1%.

The major averages all advanced in the prior session after the latest U.S. employment numbers suggested that there may be some cooling in the world's largest economy. Employers tacked on 175,000 roles in April, well below estimates, while the jobless rate accelerated marginally to 3.9% from 3.8% in March. Month-on-month wage growth was also slower than projected.

"None of this is terrible – it really isn’t a 'bad' report – but it is the first time we have seen every part of the report come in weaker than expected for a very, very long time," analysts at ING said in a note to clients.

Fed officials have been waiting for indications that the labor market is beginning to loosen before rolling out cuts to borrowing costs, which now stand at a more than two-decade highs. Traders subsequently reacted to Friday's figures by bringing forward their timeline for an initial 25 basis point reduction to September fron November.

2. Fed officials to speak

Markets will likely be keen to glean additional cues on the potential path of interest rates from speeches by several Fed policymakers this week.

On Monday, New York Fed President John Williams and Richmond Fed President Thomas Barkin are both set to speak, followed by Minneapolis Fed President Neel Kashkari a day later. Chicago Fed President Austan Goolsbee and Fed Governor Michelle will make appearances later this week as well.

Earlier this month, the central bank acknowledged a lack of progress on battling inflation, the key focus of a tightening cycle that has pushed rates up to their current heights. However, Chair Jerome Powell noted that he still believes borrowing costs were heading lower this year and said it was "unlikely" that the Fed's next move would be to increase rates once again.

Consumer confidence data on Friday is tipped to provide further insights into the trajectory of U.S. price pressures and the broader economy.

3. Earnings season marches on

Walt Disney, Wynn Resorts and Akamai Technologies (NASDAQ:AKAM) are among some of the larger companies due to report in the week ahead, as the latest quarterly earnings season approaches its final stretch.

Some of the small cap names reporting include nutrition company Bellring Brands (NYSE:BRBR), gambling group Light&Wonder (NASDAQ:LNW) and oil and natural gas firm Permian Resources Corp (NYSE:PR).

Small cap stocks have lagged broader market gains this year. The prospect of the Fed keeping rates elevated for a longer period has clouded the outlook for smaller companies, which rely more heavily on debt financing and consumer spending.

4. Chinese services activity eases slightly in April - Caixin PMI

China’s services sector eased slightly in April but remained at a relatively steady pace, a private survey showed on Monday, as new business activity grew and export demand improved from last year’s lows.

The Caixin Services Purchasing Managers' Index (PMI) came in at 52.5 in April, in line with expectations, and fell slightly from the prior month’s mark of 52.7.

The reading indicated that some aspects of the Chinese economy were resilient thanks in part to sustained stimulus and policy support from Beijing. External demand also appeared to be improving.

“The recovery of the global economy has resulted in an increase in inbound tourist numbers. This has helped produce an upward trend in service exports,” Wang Zhe, Senior Economist at Caixin Insight Group said in a note.

5. Oil prices climb

Oil prices rose in European trade on Monday after Saudi Arabia increased its official selling price for crude in June for most regions.

Meanwhile, media reports said that the latest round of ceasefire talks between Israeli and Hamas delegates in Egypt had ended with no agreement being reached. The ongoing conflict showed little signs of de-escalation, keeping expectations of geopolitical unrest in the Middle East squarely in play. This factored into some bets that continued disruptions in the oil-rich region will eventually dent crude supplies.

Brent oil futures expiring in July gained 0.7% to $83.54 a barrel, while West Texas Intermediate crude futures edged up by 0.7% to $78.32 per barrel by 03:21 ET.

Both contracts slid between 6.6% and 7.5% last week, their worst weekly performance since October.

This article first appeared in Investing.com