(Reuters) – U.S. stock index futures rose on Wednesday as investors stepped up bets that the Federal Reserve will start cutting rates earlier this year than previously expected after a string of economic data pointed to slowing economic growth.
Wall Street ended Tuesday’s session slightly higher, erasing some losses, with rate-sensitive real estate stocks leading the sector’s gains.
It came on the heels of initial losses after data showed US job openings fell to their lowest level in more than three years in April and the latest economic report suggested growth in the world’s largest economy was slowing. This gives the Federal Reserve more room to cut interest rates.
Markets are currently pricing policy easing this year at about 44 basis points. Additionally, expectations for a rate cut in September are now around 65%, up from less than 50% last week, according to FedWatch CME tool.
“The JOLTS report follows a string of weak economic data and suggests a gradual cooling of the US economy… market participants will likely welcome the cooling economy and the prospect of monetary easing, given the predominantly bullish outlook among investors,” analysts said. This is stated in a message from BCA Research.
Signs of persistent inflation and robust economic growth caused markets to abandon hopes for the timing and pace of interest rate cuts earlier in the year, when many expected policy easing to begin as early as March.
Rate-sensitive large-cap stocks rose in premarket trading, with Nvidia (NASDAQ:), Microsoft (NASDAQ:) and Amazon.com (NASDAQ:) rising between 0.4% and 1.6%.
Investors now await Friday’s nonfarm payrolls report, which will provide a more complete picture of the labor market. ADP’s national employment report, as well as surveys of the services sector, are expected later on Wednesday.
At 5:57 a.m. ET, they were up 44 points, or 0.11%, up 10.5 points, or 0.20%, and up 82.5 points, or 0.44%.
Among individual investors, shares of budget retailer Dollar Tree (NASDAQ:) rose 2.2% after a report that the company plans to explore options that include a potential sale or spinoff of Family Dollar.
Intel (NASDAQ:) shares added 1.0% after Apollo Global Management (NYSE:) agreed to acquire a 49% stake for $11 billion in a joint venture involving the chipmaker’s Irish manufacturing unit.
CrowdStrike Holdings (NASDAQ:) shares jumped 7.4% after forecasting better-than-expected second-quarter revenue when markets closed Tuesday, helped by strong demand for its cybersecurity offerings.