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U.S. stocks are poised to begin the week in positive territory as futures pointed to a rally ahead of another big week. That comes as Friday’s dismal jobs report ratcheted up recession fears while also locking in odds for a rate cut later this month from the Federal Reserve. But if inflation surprises in the coming week, it could cast some doubt on the cut.
Stock futures gained momentum on Sunday evening as investors brace for fresh inflation data and political turmoil overseas that could ripple through the bond market.
That comes as Friday’s dismal jobs report ratcheted up recession fears while also locking in odds for a rate cut later this month from the Federal Reserve.
Futures tied to the Dow Jones Industrial Average rose 94 points, or 0.21%. S&P 500 futures were up 0.23%, and Nasdaq futures added 0.38%.
The yield on the 10-year Treasury was flat at 4.091%. The U.S. dollar was up 0.05% against the euro and up 0.65% against the yen after Japan’s prime minister announced he will step down after less than a year in office.
More political turmoil in the world fourth-largest economy could rattle the bond market as investors gauge whether the next leader will lean toward fiscal discipline or more profligacy.
Similarly, France’s government faces a confidence vote on Monday after bond vigilantes sent French yields higher on expectations for more gridlock and no progress on reining in deficits.
U.S. oil prices rose 0.32% to $62.07 per barrel, and Brent crude added 0.40% to $65.76. That’s despite key OPEC+ members agreeing on another production hike meant to grab more market share.
Gold fell 0.64% to $3,630 per ounce, but still hovering near record highs after recession fears sent safe-haven assets higher last week.
More recession signals were lurking in the latest jobs data. On Sunday, Moody’s Analytics chief economist Mark Zandi point out that most U.S. industries have been shedding jobs rather than adding them for several months, warning that “this only happens when the economy is in recession.”
Such labor market weakness basically guaranteed a Fed rate cut. According to CME’s FedWatch tool, Wall Street is certain that some kind of cut is coming when the central bank announces its policy decision on Sept. 17. The only question is whether it will be 25 basis points or 50 basis points. Right now, a 92% probability of a quarter-point cut is priced in.
Perhaps the only thing that could put a rate cut in doubt is a surprise spike in inflation. The effect of President Donald Trump’s tariffs on inflation has been more muted that anticipated, but investors will get crucial updates.
