Stock futures are flat as Dow tries to add to rally above 40,000: Live updates

RBC Capital Markets is wary of the “sudden” rebound in investor sentiment after the major averages reached new highs last week.

Lori Calvasina, head of global equity strategy at RBC Capital Markets, pointed out that although yields have been sticky, the S&P 500 has diverged from its pullback in the fall, likely driven by renewed optimism that the market could get Fed rate cuts in the second half of this year, thanks to Fed comments, softer labor data, and evidence of consumer pushback on high prices.

“We have been struck by the speed and distance with which Fed expectations have swung like yet another pendulum over the past few months,” Calvasina said in a note Monday.

“The certainty with which some equity investors spoke to us this past week about why they think the Fed will cut a few times this year was the polar opposite of comments we heard in February and March where investors expressed certainty that the Fed would not be able to cut this year because the economy was too strong and inflation too sticky,” she added.

— Tanaya Macheel

Shares of Johnson Controls rose 5% after Bloomberg News reported Elliott Management has built a more than $1 billion stake in the security and safety company. Year to date, the stock has climbed 19%.

Federal U.S. debt has swelled to $34.5 trillion, up about $11 trillion from March 2020, raising concern in Washington and Wall Street.

“We’re running big structural deficits, and we’re going to have to deal with this sooner or later, and sooner is a lot more attractive than later,” Fed Chair Jerome Powell said in remarks Tuesday to an audience of bankers in Amsterdam.

JPMorgan Chase CEO Jamie Dimon also chimed in on the subject last week, noting: “America should be quite aware that we have got to focus on our fiscal deficit issues a little bit more, and that is important for the world.”

— Jeff Cox

European stocks had a cautious start Monday, with the regional Stoxx 600 index opening near the flatline before climbing 0.07% by 8:40 a.m. in London.

Germany’s DAX, the U.K.’ s FTSE 100 and France’s CAC 40 were all roughly 0.25% higher.

Taiwan’s new president, Lai Ching-te, was sworn in on Monday, taking over from his predecessor Tsai Ing-wen after securing a victory in January’s election that ushered in an unprecedented third presidential term for the Democratic Progressive Party.

His vice president, 52-year-old Hsiao Bi-khim, a former de facto Taiwan ambassador to the United States, was also sworn in.

During his inauguration speech, Lai called on China to cease its political and military intimidation against Taiwan, adding that he hoped China would “face the reality of the Republic of China’s existence” and respect the choices of the people of Taiwan.

He also said: “Let us together pursue peace and mutual prosperity,” and called on China to choose “dialogue over confrontation, exchange over containment,.

— Lim Hui Jie, Sumathi Bala

Shares of Chinese property developers in Hong Kong fell on Monday after wrapping up last week on a high note.

China’s central bank held its five-year loan prime rate steady at 3.95% on Monday. It acts as a key reference for property mortgages.

This comes after the world’s second-largest economy rolled out measures to boost its property market, including cutting down payments and removing the floor on minimum mortgage interest rates, sending real estate stocks soaring on Friday.

Logan Group and Cifi Holdings led declines on Monday, down 6.02% and 5.56%, respectively; Longfor Group was down 4.82%, while China Vanke slid about 2%. The Hang Seng Mainland Property Index on inched 1.68% lower.

China’s central bank left its one- and five-year loan prime rates unchanged at 3.45% and 3.95%, respectively.

The one-year LPR is seen as the peg for most household and corporate loans, while the five-year rate is the benchmark for most property mortgages.

The decision was in line with a Reuters poll that expected both rates to stay unchanged.

China on Friday announced measures to boost its debt-laden property market. 

— Shreyashi Sanyal

Here are some earnings reports to watch out for this upcoming week:

— Lisa Kailai Han, Robert Hum

Here’s where the major averages stand on the month ahead of Monday’s trading:

— Lisa Kailai Han