US Stock Futures Climb On Fed Rate Cut Hopes While Gold Gleams, Bitcoin Sputters: What Investors Should Know Ahead Of Thursday's Session

Zinger Key Points
  • Outsized presence of high-flying tech stocks in benchmark indices creates risk for investors, warns an analyst.
  • The recent revival in small-caps should come as a welcome relief as the rally's breadth improves.

U.S. stock futures indicate a higher opening on Thursday following the market’s two-session losing streak, buoyed by Federal Reserve Chair Jerome Powell’s seemingly dovish commentary. Bond yields are declining as the market anticipates Fed funds rate cuts this year. Investors await further insights from Powell and other Fed officials to clarify the interest rate outlook.

Traders are also monitoring developments surrounding the regional banking crisis after New York Community Bancorp, Inc.‘s NYCB bailout, along with various job market indicators.

Cues From Wednesday’s Session:

Powell’s comments were interpreted by traders as suggesting potential rate cuts this year, contributing to Wednesday’s market rebound. Major indices opened higher after February’s ADP private payroll data slightly missed expectations. Despite relinquishing some gains before Powell’s prepared speech, stocks reversed course following the Fed chief’s indication of likely rate reductions this year, contingent upon inflation returning to the 2% target.

While indices peaked around mid-session, they later retraced some gains but ultimately closed higher for the day.

Most S&P 500 sector classes closed in positive territory, with consumer staples, IT, and utility stocks leading the gains.

IndexPerformance (+/-)Value
Nasdaq Composite+0.58%16,031.54
S&P 500 Index+0.51%5,104.76
Dow Industrials+0.20%38,661.05
Russell 2000+0.70%2,068.09

Analyst Color:

A Morgan Stanley analyst on Wednesday warned about the perils of a top-heavy market. Stocks of just seven large technology companies, known as the Magnificent 7, currently represent about 30% of the index's total market capitalization, a historically high level, said Morgan Stanley’s Chief Investor Officer Lisa Shalett.

“While there may be room for these high-flying mega-caps to rise even further, their outsized presence in benchmark indices creates risk for investors,” she said. “Should even one of them tumble, it could deal a considerable blow to even a cautious investor's portfolio.”

Outlining the risks stemming from this market concentration, Shalett said all seven companies belong to the same tech sector, with overlapping business lines. “If investors sour on AI, or if one stock goes down, the whole group can fall—dragging down the value of the broader cap-weighted index,” she said. The analyst also sees risks stemming from their interest-rate sensitivity and sky-high valuations.

Futures Today

Futures Performance On Thursday ( as of 6:20 a.m. ET)

FuturesPerformance (+/-)
Nasdaq 100+0.43%
S&P 500+0.26%

In premarket trading on Thursday, the SPDR S&P 500 ETF Trust SPY rose 0.27% to $511.15 and the Invesco QQQ ETF QQQ climbed 0.45% to $440.75, according to Benzinga Pro data.

Upcoming Economic Data:

The Labor Department is scheduled to release its jobless claims report as well as the revised fourth-quarter productivity report at 8:30 a.m. ET. The jobless claims report is expected to show that the number of individuals claiming unemployment benefits may have edged up from 215,000 in the week ended Feb. 24 to 217,000 in the week ended March 2.

The revised productivity and costs report is likely to show a 3.1% quarter-over-quarter increase in non-farm productivity in the fourth quarter, revised down slightly from the 3.2% growth reported earlier. Unit labor costs may have increased by 0.5%.

The Commerce Department will release its monthly trade balance data at 8:30 a.m. ET. The consensus estimate calls for a widening of the trade deficit from $62.2 billion in December to a deficit of $63.4 billion for January.

Powell will testify for a second straight day, this time before the Senate Banking Committee.

The Treasury will auction four- and eight-week bills at 11:30 a.m. ET.

Cleveland Fed President Loretta Mester is due to speak at 11:30 a.m. ET and also make a TV appearance at 1:20 p.m. ET.

The Federal Reserve will release its consumer credit for January at 3 p.m. ET. The outstanding consumer credit is expected to surge from $1.6 billion in December to $10 billion in January.

See Also: How To Trade Futures

Stocks In Focus:

  • Victoria’s Secret & Co. VSCO fell over 29% in premarket trading after the apparel retailer reported its quarterly results.
  • ABM Industries Incorporated ABM, American Eagle Outfitters, Inc. AEO, Bilibili Inc. BILI, BJ’s Wholesale Club Holdings, Inc. BJ, Burlington Stores, Inc. BURL, Ciena Corporation CIEN, FuelCell Energy, Inc. FCEL and Kroger Co. KR are among the companies due to release their quarterly results before the market open.
  • Those reporting after the close include Holdings, Inc. BBAI, Broadcom Inc. AVGO, DocuSign, Inc. DOCU, Costco Wholesale Corporation COST, Gap, Inc. GPS, Samsara Inc. IOT, Smith & Wesson Brands, Inc. SWBI and MongoDB, Inc. MDB.
  • Rivian Automotive, Inc. RIVN climbed about 2% ahead of its R2 unveil.
  • Palantir Technologies, Inc. PLTR added over 3% ahead of its AIPCon.

Commodities, Bonds, Other Global Equity Markets:

Crude oil futures fell 0.83% to $78.47 in early European session on Thursday after the commodity climbed 1.25% on Wednesday. The yield on the benchmark 10-year Treasury note fell 0.002 percentage points to 4.102%.

In Asia, the sentiment was mixed, with the Japanese Nikkei 225 Average and Hong Kong’s Hang Seng Index retreating sharply. The Chinese market also pulled back despite a positive trade balance report from the country. Most other major markets in the region rose, apparently drawing cues from Wall Street.

European stocks stuttered and showed listlessness in early trading.

Among other markets, gold futures hit fresh all-time highs, the U.S. dollar weakened against most major currency pairs and cryptocurrencies firmed up, although apex crypto bitcoin BTC/USD has pulled back below $67,000.

Read Next: El-Erian Says Market Justified In Worrying About Economic Growth If 2 To 3 Fed Rate Cuts Don’t Happen This Year: ‘Last Mile Getting To 2% Is Really, Really Difficult’

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