Futures Rise Ahead of Fed Interest Rate Hints

• US stock futures rose on Monday as investors awaited earnings and the Fed’s meeting this week.
• The 10-year Treasury yield and US Dollar Index dropped, but have risen considerably this year.
• Stubborn inflation and slowing economic growth have fanned fears of stagflation on Wall Street.

Stocks climbed in premarket trading on Monday as investors looked forward to digesting more corporate earnings and hearing from the Federal Reserve in the week ahead.

S&P 500 and Dow Jones Industrial Average futures were up 0.2% shortly after 5 a.m. ET, while Nasdaq 100 futures were up 0.3%.

The closely monitored 10-year Treasury yield slid by 0.03% to 4.64%. It has risen sharply from 3.94% at the start of this year, as stubborn inflation has stifled hopes that the Federal Reserve will cut interest rates this summer. The central bank is scheduled to meet this week and announce its latest policy decision on Wednesday.

The US Dollar Index, which tracks the greenback’s value against a basket of foreign currencies, fell by 0.3% to 105.6. It has jumped from about 102 points in early January as the prospect of elevated rates has made the dollar more appealing to hold.

“The dollar index starts the week under selling pressure ahead of a series of jobs data from the US and the Fed’s latest policy decision,” said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, in a morning note.

“The Fed is not expected to make any changes to its policy this week, nor in June, nor in July, nor in September … with such a visible U-turn in US inflation towards the undesired direction, the Fed should not act anytime soon,” she added.

Investors started the year expecting a slew of rate cuts, but inflation has ticked up from 3.1% in January to 3.5% in March. On the other hand, GDP growth slowed to 1.6% on an annualized basis in the first quarter, down from 3.4% in the fourth quarter. The combination of persistent price growth and a cooling economy has stoked concerns of stagflation.

Domino’s Pizza, MicroStrategy, and Paramount Global are among the companies set to report earnings later.