(Reuters) – Futures tracking Wall Street’s main indexes edged higher on Monday ahead of a widely expected pause in U.S. interest rate hikes by the Federal Reserve later this week.
A slump in chipmakers on concerns over weak demand and a slide in megacap growth stocks due to rising Treasury yields had driven the S&P 500, the Nasdaq and the Dow to their worst single-day fall on Friday since Aug. 24, dropping between 0.8% and 1.5%.
Traders largely expect the Fed to keep rates unchanged at 5.25% to 5.5% during its meeting on Wednesday, while their odds for another pause in November stand at 69%, according to the CME FedWatch Tool.
A slew of recent hotter-than-expected economic data has eased recession concerns without raising fears of a September rate hike. However, a jump in energy prices has emerged as a threat to inflation that still remains above the Fed’s 2% target.
“Further rate hikes would risk sending the economy into a hard landing,” said Thomas Simons, U.S. economist at Jefferies.
“Instead, the Fed can look to a strategy of maintaining current policy rates for a long time as the best way to administer restrictive monetary policy to the economy.”
Goldman Sachs, much like other big investors such as J.P. Morgan Asset Management and Janus Henderson Investors, anticipates the central bank to lift its economic growth projections this week. It also expects rates to have peaked.
The Bank of England and the Bank of Japan will also make their monetary policy decisions this week.
At 6:38 a.m. ET, Dow e-minis were up 31 points, or 0.09%, S&P 500 e-minis were up 5.25 points, or 0.12%, and Nasdaq 100 e-minis were up 23 points, or 0.15%.
Micron Technology (NASDAQ:MU) rebounded 2.9% in premarket trading, following Friday’s rout, after Deutsche Bank upgraded its rating on the stock to “buy” from “hold”.
Asset management firm Blackstone (NYSE:BX) Inc and vacation rentals platform Airbnb, which are set to join the S&P 500 before the bell on Monday, were down 0.5% and 0.1%, respectively.
L3Harris Technologies (NYSE:LHX) rose 1.8% after Wells Fargo upgraded the aerospace and defense firm to “overweight” from “equal-weight”.
