By Ankika Biswas and Amruta Khandekar
(Reuters) -U.S. stocks were set for a muted open on Monday after the S&P 500 and the Nasdaq’s record-closing highs in the prior session, as investors paused at the start of a week packed with key jobs data and Fed Chair Jerome Powell’s congressional testimony.
The Nasdaq kicked off March by hitting an intraday all-time high on Friday, also closing at its highest level for the second day, as the artificial intelligence-driven tech rally continues to steal the spotlight on Wall Street.
The S&P 500 has also been on a record-breaking rally, with BofA Global Research lifting its year-end target for the benchmark index to 5,400, from 5,000, representing a 5% upside from current levels.
“Some type of negative AI development would be your No. 1 risk, and also if inflation remains sticky along with geopolitical political issues,” said Robert Pavlik, senior portfolio manager at Dakota Wealth.
All eyes will be on monthly non-farm payrolls, JOLTS job openings and the ADP National Employment report, as well as the Fed’s “Beige Book” scheduled throughout the week for insights into the economy’s health.
Any negative surprises on the economic front that may significantly delay the onset of rate cuts could potentially test the market’s undeterred upbeat sentiment. Investors have already pared expectations for how quickly and deeply the Fed will cut rates, as a stronger-than-expected economy risks reigniting inflation if policy eases too soon.
Powell will testify before lawmakers on Wednesday and Thursday, with analysts assuming the Fed chief to stay in wait-and-watch mode on policy after a recent escalation in inflation.
Traders see a 70.5% chance of the first rate cut arriving in June and 89% odds of that in July, as per CME Group’s FedWatch tool.
At 8:16 a.m. ET, Dow e-minis were down 129 points, or 0.33%, S&P 500 e-minis were down 5.75 points, or 0.11%, and Nasdaq 100 e-minis were up 9.75 points, or 0.05%.
Outperforming other megacaps, Nvidia climbed 2.4% in premarket trading after its market value closed above $2 trillion for the first time on Friday.
Other chipmakers including Micron Technology, Arm Holdings, and U.S.-listed shares of Taiwan Semiconductor Manufacturing gained around 3% each.
Apple shed 1.3% following a $2-billion EU antitrust fine for preventing Spotify and other music streaming services from informing users of payment options outside its App Store.
AI server maker Super Micro Computer and shoe maker Deckers Outdoor jumped 15.6% and 4.2%, respectively, as they will replace Whirlpool and Zions Bancorporation in the S&P 500 index, pulling their shares around 1% lower each.
Macy’s jumped 15.4% after real-estate-focused investing firm Arkhouse Management and Brigade Capital Management raised their offer for the department store chain.
Cryptocurrency and blockchain-related firms including Coinbase Global, Bitfarms, Riot Platforms and Marathon Digital climbed 3.7%-7.1% after bitcoin rallied to a two-year high and broke above $65,000.
Food delivery firm DoorDash and ride-hailing firm Lyft climbed 3.4% and 7.3%, respectively, after RBC Capital Markets upgraded both the stocks’ ratings to “outperform”.
(Reporting by Ankika Biswas and Amruta Khandekar in Bengaluru; Editing by Maju Samuel)