S&P 500 futures steady as markets consolidate after running to record highs

What’s driving markets

Moves are meagre across index futures, with tentative trading extending into a second day after a rally that has left the S&P 500 up 11.4% over just the last three months.

“U.S. markets paused for breath after a strong run powered by a largely successful earnings season and renewed excitement over the potential of AI, which has driven the main indices to hover around record highs,” said Richard Hunter, head of markets at Interactive Investor.

The cautious tone also comes as investors eye economic data in coming sessions that may clarify the timing of Federal Reserve interest rate cuts.

“The ongoing rates debate continues into the new week without significant resolution or change,” said Stephen Innes, managing partner at SPI Asset Management.

“Monday brought little color as market participants observed a familiar landscape, with traders and investors bracing for a busy data calendar, and the update on the Fed’s preferred price gauge ( PCE) is of keen interest,” Innes added.

The PCE, or personal consumption expenditure price index ,will be published before the market opens on Thursday, and any notable uptick in the gauge may finally kill off any lingering hopes of a Fed rate cut in May.

The rest of the week is also chock full of Fed officials making comments, though on Tuesday there is just Fed Vice Chair for Supervision Michael Barr, who is due to speak at 9:05 a.m.

The market in recent weeks has reacted to a concerted effort by Fed officials to challenge the idea that rate cuts might have started next month. Their campaign has helped push the yield on the 10-year Treasury up from about 3.8% to the current 4.26%.

U.S. economic updates set for release on Tuesday include durable goods orders for January at 8:30 a.m. Eastern, the S&P Case-Shiller home price index for December at 9 a.m., and February consumer confidence at 10 a.m.

Meanwhile, away from monetary policy, investors continue to react to corporate news, with the latest batch of earnings reports proving mixed. Sentiment on Tuesday may be supported by a 10% rise in shares of Zoom Video Communications
ZM,
-0.44%
after the video-conference company late Monday delivered well-received results.

However, shares in Unity Software
U,
+5.69%
tumbled 20% after the app-monetization group’s earnings and forecasts underwhelmed.

Companies reporting results on Tuesday include AutoZone
AZO,
+0.51%,
Lowe’s
LOW,
-0.53%
and Cracker Barrel
LOW,
-0.53%
before the opening bell, followed after the close by Devon Energy
DVN,
-0.11%,
First Solar
FSLR,
+1.18%
and Cava
CAVA,
-0.98%.