By Sruthi Shankar and Shristi Achar A
Wall Street futures were subdued on Monday after a solid rally last week, as investors assessed chances of the Federal Reserve pausing interest rate hikes at its upcoming policy meeting.
U.S. stocks rallied on Friday after a report showed that wage growth moderated in May, raising hopes that the U.S. central bank could skip a rate hike next week, while investors welcomed a Washington deal that avoided a catastrophic debt default.
The benchmark S&P 500 closed at a fresh nine-month high on Friday and the tech-heavy Nasdaq scaled a new one-year peak, underpinned by gains in megacap technology stocks that have outperformed the broader market this year.
Traders are pricing in a 77% chance that the Fed will hold interest rates at 5%-5.25% in its June 13-14 policy meeting, according to CME Group's Fedwatch tool, though they expect another hike in July.
"Inflation does appear to be coming down on the headline level, as are producer prices at a faster rate and these tend to be leading indicators, even with core prices being sticky," said Michael Hewson chief market analyst at CMC Markets.
"That would suggest that core prices will come down, albeit at a much slower rate than originally thought."
Surveys from S&P Global and Institute for Supply Management on U.S. services sector activity in May are due after the opening bell, while Fed Cleveland President Loretta Mester is slated to speak at an event later in the day.
At 7:18 a.m. ET, Dow e-minis were up 31 points, or 0.09%, S&P 500 e-minis were up 2.75 points, or 0.06%, and Nasdaq 100 e-minis were down 17 points, or 0.12%.
The CBOE volatility index, also known as Wall Street's fear gauge, rose 0.6 point to 15.17 after closing at its lowest since February 2020 on Friday.
Energy stocks including Exxon Mobil Corp, Chevron Corp and Schlumberger Ltd rose about 1% each in premarket trading, as oil prices jumped 2% after top global exporter Saudi Arabia pledged to cut production by another 1 million barrels per day from July. [O/R]
Palo Alto Networks Inc climbed 4.6% as the cybersecurity firm looks set to replace Dish Network in the S&P 500 index. Dish shares tumbled 3.2%.
Big U.S. banks were mixed after the Wall Street Journal reported that U.S. regulators were preparing to tighten rules for large banks, which could include raising their capital requirements by 20% on average. Bank of America Corp edged up 0.1%, while Citigroup Inc slipped 0.2%.
Apple Inc rose 1.0% ahead of its annual software developer conference, where it is widely expected to announce a new mixed-reality headset.
(Reporting by Sruthi Shankar and Shristi Achar A in Bengaluru; Editing by Vinay Dwivedi)
