US stock futures edge higher; Powell’s testimony looms large

U.S. stock index futures rose Tuesday as increased expectations for a September rate cut kept Wall Street buoyant before testimony from Federal Reserve Chair Jerome Powell.

At 06:00 ET (10:00 GMT), Dow Jones Futures rose 35 points, or 0.1%, S&P 500 Futures rose 11 points, or 0.2%, and Nasdaq 100 Futures rose 75 points, or 0.4%.

The S&P 500 and the Nasdaq Composite eked out record highs on Monday, extending recent gains as traders priced in a greater chance the Fed will begin cutting interest rates from September. The Dow Jones Industrial Average lagged, falling 0.1%.

Powell testimony in focus
Powell is set to begin his two-day testimony before Congress, starting later Tuesday with the Senate before the House on Wednesday.

The Fed Chair is expected to offer more cues on monetary policy, with markets watching for any dovish signals, especially in the wake of softer inflation and labor data in recent weeks.

Beyond Powell’s testimony, several other Fed officials are also set to speak this week, including open markets committee members Michelle Bowman and Raphael Bostic.

Investors will also be looking to key consumer price index inflation data for June, which is due on Thursday, for more cues on the path of inflation. The Fed has repeatedly signaled that it needs more confidence that inflation is easing, before it can begin cutting interest rates.

The CME Fedwatch tool showed traders pricing in an over 70% chance for a 25 basis point cut in September, up from last week’s 59%.

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Earnings season to begin with banks
Focus this week will also be on the second quarter earnings season, which is set to begin with results from several major banks at the end of the week.

JPMorgan Chase (NYSE:JPM), Wells Fargo (NYSE:WFC) and Citigroup (NYSE:C) are set to report quarterly earnings on Friday.

PepsiCo (NASDAQ:PEP) and Delta Air Lines (NYSE:DAL) are also on tap this week.

Additionally, Fisker (OTC:FSRNQ) is recalling 7,545 Ocean electric SUVs due to an issue with a water pump that could cause a loss of power, the National Highway Traffic Safety Administration said.

Crude slips after Beryl passes
Crude prices edged lower Tuesday, after Hurricane Beryl caused less damage to a key U.S. oil-producing region than expected, easing concerns over supply disruption.

By 04:00 ET, the U.S. crude futures (WTI) fell 0.5% to $81.91 a barrel, while the Brent contract dropped 0.4% to $85.39 a barrel.

Market participants are also keeping an eye on the situation in the Middle East, as hopes of a possible ceasefire deal in Gaza, potentially reducing worries about global crude supply disruption, hit crude prices on Monday.

The American Petroleum Institute releases its estimates of weekly crude inventories later in the session, with a draw expected given the summer driving season.

(Ambar Warrick contributed to this article.)

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