US Stock Futures Inch Up Ahead of Key Labor Market Data

US stocks rise pre-market on hopes for earlier Fed rate cuts due to cooling economy. Key data points this week: ADP payrolls & May jobs report. HPE stock surges on strong AI server sales. Lam Research poised for AI chip boom. Apple (AAPL) nears pre-WWDC high.

Jun 5, 2024 - 07:42
Jun 5, 2024 - 07:43
US Stock Futures Inch Up Ahead of Key Labor Market Data
US Stock Futures Inch Up Ahead of Key Labor Market Data

Investors cautiously nudged US stocks higher pre-market on Wednesday, buoyed by a growing belief that the Federal Reserve might cut interest rates sooner than expected. This optimism stems from signs of a cooling economy, particularly a recent report showing job openings falling to a three-year low in April.

The question remains: is this a soft landing or a potential recession? While a weakening labor market could prompt the Fed to lower borrowing costs, it also raises concerns about overall economic health. Despite this uncertainty, market sentiment seems to be shifting towards a potential rate cut. According to the CME FedWatch tool, roughly 65% of traders now anticipate the Fed reducing rates in September, compared to less than 50% a week ago.

This week's key economic data point remains Friday's May jobs report. However, investors will also be keeping an eye on the ADP private payrolls report due later today, along with updates on services activity.

In individual company news, Hewlett Packard Enterprise (HPE) is poised for its biggest one-day gain since 2016. Pre-market trading shows a surge of up to 13% for HPE stock, following the company's strong revenue report driven by increased sales of AI-powered servers.

Chip Powerhouse Lam Research Poised for AI Boom

Lam Research (LRCX) is strategically positioned to capitalize on the red-hot market for artificial intelligence (AI) chips.This leading chip supplier, a trusted partner for tech titans like Intel, Samsung, and TSMC, expects its high-bandwidth memory business to experience explosive growth – tripling in size this year alone. Industry experts predict even more robust demand for these memory solutions in 2025.

"Looking ahead, we see sustained momentum for the foreseeable future," declared Lam Research's CFO, Doug Bettinger,during a fireside chat at Bank of America's Global Technology Conference. "The potential within the AI chip sector is truly transformative, and Lam Research is ideally placed to capture a significant share of this burgeoning market," Bettinger emphasized.

This optimistic outlook is validated by Bank of America's recent decision to raise their price target for Lam Research stock to a staggering $1,100, while maintaining a strong "buy" recommendation.

Apple Gears Up for WWDC as Stock Surges

Apple (AAPL) rides a five-day winning streak, setting its sights on surpassing its late January closing peak of $195.75 ahead of the much-anticipated Worldwide Developers Conference (WWDC) kicking off this coming Monday.

Morgan Stanley analyst Erik Woodring has released a comprehensive analysis exploring what to expect from the event and its potential impact on Apple's stock price.

Also Read: Berkshire Hathaway Stock Plummets 99.9% Due to NYSE Technical Issue

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