(Bloomberg) — Stocks rose on bets that a weakening economy will give the Federal Reserve room to cut interest rates this year, while Treasury bonds pared a rally that had sparked the biggest two-day drop in yields this year.
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S&P 500 contracts rose after the underlying index closed just 0.6% below the all-time high it hit in May. The 10-year Treasury yield rose 2 basis points to 4.35%.
Market attention has shifted to a series of labor market indicators this week, including Friday’s U.S. employment report, for further clues as to when the Fed might cut interest rates. The figures, due late on Wednesday, will include private employment data and the latest indicators for the U.S. services sector.
“We’re starting to see some slack in the labor market, which gives the Fed more flexibility,” Justin Onuekusi, chief investment officer at St. James’s Place Management, said in an interview. “Labor market data was weak last week, so all eyes will be on this number,” he said of the jobs report.
The European Central Bank is expected to overtake the Fed and begin a rate-cutting cycle on Thursday.
With the Fed’s key inflation indicator remaining stable and manufacturing and spending data weaker than expected, expectations of the Fed’s first 25 basis point rate cut are now leaning to November, a month earlier than initially expected.
In premarket trading, Hewlett Packard Enterprise and CrowdStrike Holdings Inc. were upbeat after better-than-expected earnings. Shares of chipmakers Intel, Nvidia and Advanced Micro Devices Inc. all rose more than 1%.
Technology, communications and retail led European stock gains after Zara parent Inditex SA reported better-than-expected earnings.
In Asia, Indian shares rallied after allies of Prime Minister Narendra Modi’s party voiced support for forming a coalition government. The Nifty 50 index rose more than 2%, clawing back some of the losses from Tuesday, when the index fell to its steepest drop in four years.
Major events this week:
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Canada interest rate decision Wednesday
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US ADP Employment, S&P Services PMI, ISM Services, Wednesday
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Eurozone retail sales, ECB interest rate decision on Thursday
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US initial jobless claims, trade Thursday
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China trade, foreign exchange reserves on Friday
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Eurozone GDP on Friday
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U.S. unemployment rate, nonfarm payrolls on Friday
Some of the key market developments:
stock
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S&P 500 futures were up 0.2% as of 6:25 a.m. New York time.
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Nasdaq 100 futures up 0.5%
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Dow Jones Industrial Average futures up 0.2%
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The Stoxx Europe 600 index rose 0.7%
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The MSCI World Index was little changed
currency
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The Bloomberg Dollar Spot Index was little changed.
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The euro fell 0.1% to $1.0868.
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The British pound was little changed at 1.2771 to the dollar
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The Japanese yen fell 0.8% to 156.16 yen to the dollar.
Cryptocurrency
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Bitcoin rose 0.5% to $70,790.29.
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Ether fell 0.4% to $3,792.87.
Bonds
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The yield on the 10-year Treasury note rose 2 basis points to 4.35%.
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German 10-year government bond yields were little changed at 2.54%.
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UK 10-year government bond yields rose 3 basis points to 4.21%.
merchandise
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West Texas Intermediate crude rose 0.2% to $73.41 a barrel.
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Spot gold rose 0.2% to $2,331.46 an ounce.
This story was produced with assistance from Bloomberg Automation.
–With assistance from Krystof Chamonikolas.
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