Wall Street is heading into the new week with a spring in its step, and the overnight numbers tell the story. S&P 500 futures and Nasdaq futures both pushed higher after a strong five-day stretch, while Dow Jones futures clung to a spot just below record highs. The whole move rests on a single calendar entry that traders keep circling: the release of the Federal Reserve's June meeting minutes on Wednesday. Those minutes will be the first ever published under new Chairman Kevin Warsh, and how they read on the question of interest rates could set the mood for markets through the back half of summer.
Last week the Dow closed in on 53,000, a level it has never actually touched before. That climb came even as chipmakers stumbled and money rotated into other corners of the market. Right now the sectors doing the heavy lifting are financials, healthcare and industrials, while semiconductors, after months of leading the charge, are taking a breather. Overseas, Asia-Pacific markets traded a bit mixed on Monday, and the Japanese yen sat near a 40-year low against the dollar, adding one more layer for traders to watch alongside the action at home.
S&P 500 Futures, the Nasdaq Outlook and a Fed Minutes Preview
Futures Build on Last Week's Gains
Futures jumped Sunday night, extending a rally that had already pushed the Dow into record territory. Dow Jones futures added 89 points, or 0.17%, S&P 500 futures gained 0.4%, and Nasdaq futures climbed 0.98%. Over the past week the Dow rose almost 2%, the S&P 500 added 1.8% and the Nasdaq Composite gained 2.1%, all of it happening even as chipmakers went through a rough stretch and money moved into financials, healthcare and industrials.
Mark Newton, head of Technical Strategy at Fundstrat, had this to say:
"The broadening in sector rotation is a big positive, with Financials, Healthcare, and Industrials all closing at new weekly all-time highs this week and more than offsetting the consolidation in Semis."
Newton thinks the S&P 500 can reach 8,000 by mid-August, which sits about 7% above where the benchmark closed last week, at 7,483.24. The VanEck Semiconductor ETF, meanwhile, dropped 3.2% over the week, its second losing week in a row, as investors trimmed their chip exposure while the rest of the market kept grinding higher.
Why the Fed Minutes Are the Week's Main Event
The bigger story, though, sits in Washington. Minutes from the Federal Reserve's June meeting, the first under new Chairman Kevin Warsh, come out Wednesday, and after such a strong run in S&P 500 and Nasdaq futures, traders are watching closely for any clue about where rates go next.
Market veteran Ed Yardeni said:
"Fed funds futures now imply 1.5 rate hikes over the next 12 months, a sharp reversal from the deep rate cut pricing that dominated the past three years. The minutes should indicate how much of that repricing the committee actually endorses."
What Traders Should Watch This Week
Beyond the Fed minutes, the market also has to reckon with moves overseas. Japan's Nikkei 225 fell 0.7% while the Topix added 0.2%. South Korea's Kospi lost 0.91%, Hong Kong's Hang Seng rose 0.4% and China's CSI 300 gained 0.2%. The Japanese yen traded at 161.54 per dollar, not far off last week's 40-year low, while South Korea's won slipped to 1,532.82 per dollar as investors weighed AI trades against the wait for Dow Jones futures and the wider direction of the index.
Crude oil also stayed mixed after OPEC+ agreed to raise production by 188,000 barrels a day in August, its fifth straight monthly increase. Brent futures sat flat at $72.12 a barrel and WTI ticked up 0.20% to $68.80, a backdrop traders are watching for any sign of inflation pressure heading into the Fed minutes.
Into the rest of the week, the tone stays cautiously upbeat, and that is a fair way to put it. S&P 500 futures and Nasdaq futures are pointing higher, Dow Jones futures are holding near record levels, and the Fed minutes remain the one event that could decide whether this rally keeps its footing or stalls out. Traders are also keeping an eye on deal headlines, such as Lockheed Martin's pursuit of naval defense group Ultra Maritime in a deal valued near $3.5 billion, for hints on where capital heads next.
