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Stock futures slipped Monday morning, marking a cautious start to the week after closing on a high note previously. This dip comes amid recalibrated market expectations for an interest rate cut, driven by unexpectedly robust job and wage growth data from May.
Adding to the global economic and political landscape, French President Emmanuel Macron's announcement to dissolve the nation's parliament and call for a new legislative election injects a fresh layer of uncertainty into the markets. These developments collectively set a complex stage for investors as they navigate through the early trading hours.
Nvidia Stock Split Impact
Stock futures slid Monday morning after a strong close last week. Dow Jones Industrial Average futures fell by about 0.2%, while S&P 500 futures and Nasdaq 100 futures dipped slightly. Nvidia stock, a recent market driver, also fell in premarket trading. Shares of the AI-focused chipmaker were down 0.2% after a 10-1 split took effect. Nvidia shares now trade at around $120 each, reflecting the split.
Premarket Movers:
| Company | Stock Change | Details |
|---|---|---|
| Apple (NASDAQ:AAPL) | +0.4% | Stock rose ahead of annual developer conference, expected to showcase AI integration, revamped Siri, and possible OpenAI tie-up. |
| DraftKings (NASDAQ:DKNG) | +2% | Morgan Stanley added to Top Pick list, citing positive catalysts from capital return and reiterated guidance. |
| Moderna (NASDAQ:MRNA) | +1.5% | Combination vaccine for Covid-19 and flu more effective than existing standalone shots in late-stage trial. |
| Tesla (NASDAQ:TSLA) | -0.2% | Norway's sovereign wealth fund to vote against ratifying CEO Elon Musk's $56 billion pay package. |
| Broadcom (NASDAQ:AVGO) | +1.4% | Morgan Stanley resumed coverage at ‘overweight’, calling it one of the strongest AI plays. |
| GameStop (NYSE:GME) | +7.7% | Stock bounced from Friday’s 40% drop after a big first-quarter sales miss. |
| Southwest Airlines (NYSE:LUV) | +9% | Activist investor Elliott Investment Management built a nearly $2 billion stake and plans to push for changes. |
Federal Reserve Meeting Outlook
The positive jobs report on Friday posed a challenge for investors hoping for a Federal Reserve rate cut.
Market expectations for an interest rate reduction fell after May’s job and wage growth exceeded predictions. Fed funds futures now show almost no chance of a rate cut at the policy meetings this month and next month, with only a 54% probability in September. The consumer price index, due Wednesday, and the producer price index, set for Thursday, will help determine the central bank’s future rate decisions.
High inflation, still above the Fed’s 2% target, continues to dampen hopes for easier monetary policy and larger stock market returns.
France’s Political Shift
French President Emmanuel Macron announced the dissolution of the nation’s parliament and called for a new legislative election following a significant defeat in the EU vote. Marine Le Pen’s far-right National Rally party garnered around 31% of the vote, more than doubling the support for Macron’s centrist Renaissance Party. In a national address, Macron stated, “This is an essential time for clarification. I have heard your message, your concerns, and I will not leave them unanswered.” French voters are set to return to the polls on June 30 and July 7.
Crude Oil Prices Edge Up
Crude oil prices rose Monday, steadying after three consecutive weeks of losses ahead of monthly reports from OPEC and the International Energy Agency (IEA), as well as the upcoming Federal Reserve meeting.
By early morning, U.S. crude futures (WTI) were up 0.3%, trading at $75.77 per barrel, while Brent crude climbed 0.4% to $79.91 a barrel. OPEC is set to release its monthly report on Tuesday, focusing on the group’s outlook for annual crude demand. The IEA will also release its report later in the week.
The crude market experienced its third straight weekly loss last week, driven by concerns over OPEC+’s plan to unwind production cuts from October, potentially increasing global supply.
Elliott Management’s Stake in Southwest Airlines
Elliott Investment Management has acquired a nearly $2 billion stake in Southwest Airlines (NYSE: LUV), aiming to push for changes to improve the carrier’s performance, according to the Wall Street Journal.
This investment makes Elliott one of Southwest’s largest shareholders. Southwest’s shares have declined nearly 4% in 2024 and are below their level from March 2020, when the COVID-19 pandemic triggered travel restrictions. The airline, which once posted 47 consecutive years of profits, now faces higher costs due to new labor contracts and delays in deliveries from Boeing (NYSE: BA).
