US stock futures muted as rate cut rally cools, more Fed speak awaited

U.S. stock index futures tread water in evening deals on Monday as some Federal Reserve officials said interest rates were likely to remain unchanged in the near-term, with focus turning to more upcoming Fed speakers this week.

Wall Street marked three straight days of gains as some less hawkish Fed comments and softer-than-expected nonfarm payrolls data saw investors increase their bets on a September rate cut. The CME Fedwatch tool showed traders pricing in a 48% chance for a 25 basis point reduction in September.

The first quarter earnings season is also set to carry on this week, with earnings from media giant Walt Disney Company (NYSE:DIS) and oil and gas majors Duke Energy Corporation (NYSE:DUK) and Occidental Petroleum Corporation (NYSE:OXY) due on Tuesday.

S&P 500 Futures steadied at 5,205.0 points, while Nasdaq 100 Futures fell slightly to 18,184.75 points by 19:33 ET (23:33 GMT). Dow Jones Futures were flat at 38,991.0 points.

Fed needs more confidence in easing inflation
While softer-than-expected payrolls data pushed up optimism over some cooling in the labor market, Fed officials said on Monday that the central bank will need more confidence that inflation was easing before it can cut interest rates.

Richmond Fed President Thomas Barkin said that current monetary policy was restrictive enough to eventually bring inflation within the Fed’s 2% annual target, while relative strength in the job market will give the bank enough headroom to wait until this happens.

New York Fed President John Williams also said that current monetary conditions were adequate to bring down inflation.

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Their comments came following similar signals from a Fed meeting last week. More central bank officials are also set to speak this week, with an address from Minneapolis Fed President Neel Kashskari due on Tuesday.

Inflation remained the biggest point of contention for the Fed in considering rate cuts, given that price pressures grew more than expected through the first quarter and remained well above the Fed’s 2% annual target.

Wall St marks three straight days of gains
Wall Street indexes rose for a third consecutive session on Monday, having recouped a bulk of losses seen in April.

The S&P 500 rose 1% to 5,180.74 points, while the NASDAQ Composite added 1.2% and finished at 16,349.25 points. The Dow Jones Industrial Average closed up 0.5% at 38,852.27 points.

A swathe of strong technology earnings saw the Nasdaq race past its peers in recent sessions, with the index now trading about 200 points below a record high hit in late-March.