(Reuters) -U.S. stock index futures rose on Monday, building on gains from last week as a flurry of AI-related dealmaking and softer labor market trends bolstered expectations for an interest-rate cut.
The resilience in equities came despite the federal government shutdown showing little signs of resolution, underscoring the persistent appetite for tech stocks and an increased focus on the upcoming earnings season for cues on the trajectory of the economy.
“The current AI infrastructure buildout is structurally more durable than prior large cycles. It’s funded by strong cash flows and AI adoption can happen without costly consumer device upgrades,” BofA Securities senior analyst Vivek Arya said in a note.
While the shutdown has delayed the release of the closely watched nonfarm payrolls report, a slew of alternative indicators last week pointed to tepid hiring, reinforcing expectations that the Federal Reserve will cut rates by 25 bps at its next meeting.
With little else on the calendar today, traders lacking fresh catalysts will have to lean on that same data to guide near-term positioning.
At 05:25 a.m. ET, Dow e-minis were up 72 points, or 0.15%, U.S. S&P 500 E-minis climbed 21.5 points, or 0.32%, and Nasdaq 100 E-minis rose 127.25 points, or 0.51%.
Goldman Sachs expects the military pay date on October 15 to pressure lawmakers into ending their deadlock. If the shutdown stretches beyond that date, roughly 1.3 million uniformed military personnel would go unpaid, the brokerage said.
However, even if a deal is reached, the timeline for releasing delayed data remains uncertain, increasing the likelihood that the Fed will be operating with limited visibility into the economy at its upcoming meeting.
The third-quarter earnings season that kicks off next week will also test the durability of the rally.
“The next two weeks of earnings are going to matter more than usual. There will be some economists that look for proxies for the government data. The most ‘boots on the ground’ data that the Fed is going to have is going to be the earnings data and the forecasts,” said Arnim Holzer, global macro strategist at Easterly EAB.
By the end of October, 68% of companies representing 72% of market cap will have reported, according to Goldman.
Among stocks, Micron Technology rose 4% premarket after Morgan Stanley upgraded it to “overweight” from “equal weight”.
Crypto stocks gained with bitcoin near all-time highs. Coinbase Global rose 2.6%, Riot Platforms jumped 3.7% while MARA Holdings climbed 3.2%.
(Reporting by Niket Nishant in Bengaluru; Editing by Devika Syamnath)
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