June 10 2024: U.S. stock futures dipped on Monday as investors prepared for a pivotal week highlighted by a Federal Reserve interest rate decision and critical inflation data. Meanwhile, Elliott Investment Management reportedly acquired a stake in Southwest Airlines (NYSE
), aiming to drive a turnaround in the low-cost carrier’s performance.
Futures Lower
U.S. stock futures pointed lower on Monday, with investors eyeing a major Federal Reserve interest rate decision and key monthly inflation data later in the week.
By 03:46 ET (07:46 GMT), Dow futures had fallen by 87 points or 0.2%, S&P 500 futures were down 6 points or 0.1%, and Nasdaq 100 futures had decreased by 43 points or 0.3%.
The main Wall Street indices had previously declined in a volatile trading session, influenced by a stronger-than-expected jobs report, which raised concerns that the Fed might delay potential rate cuts longer than anticipated.
Despite this, the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average all posted weekly gains.
Fed Decision This Week
Markets broadly expect the Fed to maintain borrowing costs at over two-decade highs after its policy meeting concludes on Wednesday. Attention will be on any hints the central bank provides about future rate outlooks.
The Fed’s dot plot, updated for the first time in three months, is expected to indicate officials foresee two 25-basis point cuts this year, down from three projected in March.
Several Fed officials have recently stated they need more proof that inflation is sustainably cooling towards the 2% target before initiating rate cuts. Although price increases have moderated following aggressive rate hikes since 2022, they remain above 2%.
May Inflation Data Due This Week
New U.S. inflation data is set to be released just hours before the Fed’s decision on Wednesday.
Economists predict that annualized headline price growth in May will be consistent with the previous month’s pace but slower on a monthly basis. The “core” reading, which excludes volatile items like food and fuel, is expected to decelerate slightly year-on-year and match April’s monthly rate.
These numbers will be closely monitored by Wall Street, as they could provide insights into the Fed’s policy direction for the rest of the year. According to CME Group’s (NASDAQ
) FedWatch Tool, there is now about a 53% chance that the Fed will reduce rates from their current level of 5.25% to 5.5% by September.
Elliott Takes Almost $2 Billion Stake in Southwest Airlines
Elliott Investment Management has acquired nearly $2 billion in Southwest Airlines stock and plans to push for changes to improve the airline’s performance, according to the Wall Street Journal on Sunday.
The activist investor has become one of Southwest’s largest shareholders, the WSJ reported, citing sources familiar with the matter.
This news comes as Southwest’s shares are down nearly 4% in 2024 and remain below their March 2020 levels when the COVID-19 pandemic imposed travel restrictions that heavily impacted the airline industry. In addition to COVID-19’s effects, Southwest, which previously enjoyed 47 consecutive years of profits, has been hit by higher costs from new labor contracts and delays in aircraft deliveries from Boeing (NYSE
).
Crude Prices Inch Higher
Crude prices rose on Monday, stabilizing after three consecutive weeks of losses, ahead of monthly reports from OPEC and the IEA, as well as the upcoming Fed meeting.
By 03:36 ET, U.S. crude futures (WTI) increased by 0.3% to $75.77 per barrel, while the Brent contract rose by 0.4% to $79.91 a barrel.
The Organization of the Petroleum Exporting Countries (OPEC) is set to release its monthly report on Tuesday, with the oil group’s outlook on annual crude demand likely to be in focus.
A monthly report from the International Energy Agency (IEA) is also due later this week.
Last week, the crude market experienced its third consecutive weekly loss due to concerns that OPEC and its allies, known as OPEC+, might add to the rising global supply by reversing production cuts from October.
