Dow Jones and Nasdaq futures flat pre Powell speech, OECD forecasts US growth decline

Wall Street futures remained tepid ahead of Federal Reserve Chair Jerome Powell's speech, despite the Nasdaq reaching new highs driven by tech gains, while gold surged to new records above $3,781/oz and WTI crude rose 1.1%. The OECD upgraded its global growth forecast to 3.2% and US growth to 1.8% for the current year, yet projected a significant deceleration for the US economy to 1.5% by 2026 from 2.8% in 2024, indicating resilient near-term global growth but a notable slowdown for the US.

Analysis

Market sentiment is distinctly cautious, with US equity futures for the S&P 500 and Nasdaq 100 trading just below flat, while Dow Jones futures show a marginal gain under 0.1%. This tepid pre-market activity reflects investor apprehension ahead of an afternoon speech by Federal Reserve Chair Jerome Powell, creating a stark contrast to the previous session's technology-driven rally where the Nasdaq climbed 0.7% to a new record high, led by strong gains in Nvidia, Apple, and Oracle. In commodities, WTI crude oil has advanced 1.1% to $62.94, but the standout is gold, which has surged another 0.9% to a new high above $3,781 per ounce, reportedly driven by news that China's central bank may become a custodian for foreign reserves of allied nations. On the macroeconomic front, the OECD has provided a mixed outlook, upgrading its 2025 global growth forecast to 3.2% and the US forecast to 1.8%, but simultaneously projecting a sharp deceleration in US growth from 2.8% in 2024 to just 1.5% in 2026, signaling near-term resilience but future headwinds.

Key Decisions for Investors

• Investors should maintain a cautious stance and monitor Jerome Powell's speech for any shifts in monetary policy guidance, as the flat futures indicate the market is highly sensitive to new information on inflation and growth.
• Given the divergence between the record-setting Nasdaq and the broader market, assess exposure to high-growth tech stocks like NVDA and AAPL in light of the OECD's forecast for a significant US economic slowdown.
• The surge in gold to new highs, linked to geopolitical reserve shifts, warrants considering an allocation to GLD as a potential hedge against de-dollarization trends and heightened global uncertainty.
• The OECD's projection of US growth falling to 1.5% by 2026 suggests a need to review cyclical exposures and potentially rotate towards sectors less dependent on a strong domestic US economy.