Futures take breather after Wall St rally; economic data in focus

By Ankika Biswas and Amruta Khandekar

(Reuters) -U.S. stock index futures were muted 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.

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 health of the economy.

Any negative surprises on the economic front that may significantly delay the onset of rate cuts this year 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 is also set to 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.

"With January's core PCE inflation data picking up, the path to achieving the 2% target may not be so easy, particularly with the labor market data remaining strong. We still expect the first Fed rate cut in June," HSBC analysts said in a note.

Market participants see a 73.3% chance of the first Fed rate cut arriving in June and 90.4% odds of that happening in July, as per CME Group's FedWatch tool.

At 7:01 a.m. ET, Dow e-minis were down 101 points, or 0.26%, S&P 500 e-minis were down 6.75 points, or 0.13%, and Nasdaq 100 e-minis were down 2.5 points, or 0.01%.

Outperforming other megacap stocks, Nvidia gained 1.5% 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 between 2% and 3.6% and are set to extend an AI rally from last week.

Shares of Super Micro Computer jumped 13.2% after the AI server maker was set to join the S&P 500 index.

Macy's advanced 15.8% 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 between 4% and 6.7% after bitcoin rallied to a two-year high and broke above $65,000.

Shares of food delivery firm DoorDash and ride-hailing firm Lyft climbed 2.1% and 5.7% respectively after RBC Capital Markets upgraded ratings on both the stocks to "outperform" from "sector perform."

(Reporting by Ankika Biswas and Amruta Khandekar in Bengaluru; Editing by Maju Samuel)