Nasdaq, S&P Futures Surge Ahead of FOMC Minutes, September Inflation Prints — PepsiCo, Tech And Chinese Stocks In Focus

Zinger Key Points
  • Key data/reports due for release in the upcoming 3 sessions of week could render clarity to the rate outlook.
  • Fed officials have been harping on inflation and another 75-basis-point hike could not come as a surprise.

The major U.S. index futures are pointing to a higher opening on Wednesday after the mixed close in the previous session. Bargain hunting following six straight sessions of declines by the broader market could help offset some of the nervousness of traders ahead of two inflation reports.

Tuesday, stocks opened lower but cut their losses over the course of the morning trading. Although the averages moved above the flat line by midsession, they continued to show volatility.

Renewed selling emerged in late afternoon trading following hawkish comments by Cleveland Fed President Loretta Mester and Bank of England Governor Andrew Bailey’s mandate to pension fund managers to finish rebalancing by Friday when the central bank would end its emergency support for the domestic bond market.

The Dow Industrials sneaked back above the unchanged line in the final hours of trading, resulting in a mixed close on Wall Street on Tuesday.

The Nasdaq Composite fell to a fresh two-year low. Meanwhile, the S&P 500 Index and the Dow Industrial Average are holding above Sept. 30 two-year lows — although on an intraday basis, the former touched a new two-year low.

Tuesday’s declines were led by technology, communications and financial stocks, while defensive sectors such as consumer staple, healthcare and real estate stocks found modest-to-moderate strength.

U.S. Indices' Performance On Tuesday
Index Performance (+/-)   Value
Nasdaq Composite -1.10%   10,426.19
S&P 500 Index -0.65%   3,588.84
Dow Industrials +0.12%   29,239.19

The year could end up with losses of over 20% for the S&P 500 Index, although there’s still time for a nice year-end bounce, Ryan Detrick, chief market strategist at Carson Group said. Only three times since World War II — 1974, 2002 and 2008, the index has incurred losses of this magnitude, he noted. In subsequent years, the broader gauge jumped 31.5%, 26.4% and 23.5%, respectively, according to Detrick.

A peek into index futures trading:

U.S. Futures' Performance On Wednesday During Premarket Session
Index Performance (+/-)  
Nasdaq 100 Futures +0.75%  
S&P 500 Futures +0.52%  
Dow Futures +0.36%  
R2K Futures +0.64%  

In premarket trading on Wednesday, the SPDR S&P 500 ETF Trust SPY rose 0.58% to $359.83 and Invesco QQQ Trust QQQ gained 0.88% to $265.05, according to Benzinga Pro data.

On the economic front, the Labor Department is scheduled to release the producer price inflation report for September at 8:30 a.m. EDT, with economists widely expecting an acceleration in the monthly rate of the headline wholesale inflation. The core reading, excluding food and energy, could have slowed from August.

Minneapolis Fed President Neel Kashkari is scheduled to participate in a town hall at 10 a.m. EDT.

The Treasury will hold an auction of 10-year notes at 1 p.m. EDT.

Fed Vice Chair for supervision Michael Barr is scheduled to speak at 1:45 p.m. EDT.

At 2 p.m. EDT, the Federal Reserve will release the minutes of the September monetary policy meeting, in which it handed down a third straight 75-basis-point hike. The minutes could shed additional light on the Fed’s thinking and its outlook toward near-term interest rates.

Michelle Bowman, a member of the Fed’s board of governors, is due to speak on "Forward Guidance as a Monetary Policy Tool: Considerations for the Current Economic Environment" before the Money Marketeers of New York University at 6:30 p.m. EDT.

Ahead of the market open, the Mortgage Bankers Association will release data on the mortgage applications volume for the week that ended Oct. 7.

See also: Here Are 5 October Stock Picks From Benzinga's Most Accurate Analysts

Stocks In Focus:

  • PepsiCo., Inc. PEP was rallying in the premarket session after the beverage giant reported third-quarter revenue that exceeded estimates and raised its full-year guidance.
  • Tech stocks were on a rebound, led by Micron Technology, Inc. MU, Qualcomm, Inc. QCOM, Advanced Micro Devices, Inc. AMD.
  • U.S.-listed Chinese stocks, including EV trio Nio, Inc. NIO and Li Auto, Inc. LI, were solidly higher.

Large-Cap Premarket Movers:

  • Dutch chip-equipment maker ASML Holdings N.V. ASML traded over 2.3% higher in the premarket session following recent losses.
  • Chinese e-commerce platform Pinduoduo, Inc. PDD advanced 2.4%.
  • Peer, Inc. JD was also hovering in positive territory, up 2.3%.

Read Next: How Does The Stock Market Work

Crude, Global Equity Markets:

Crude oil futures were flatlining after pulling back sharply in the previous two sessions. Demand concerns amid expectations of a global recession have been weighing down on the commodity in the recent past.

Sentiments in Asia were mixed, with the Chinese market advancing strongly, while the Indian and South Korean markets saw moderate strength. The Hong Kong, Indonesia, Malaysia and New Zealand markets came under selling pressure.

Traders in the region reacted to a lackluster close by Wall Street overnight and the continued dollar strength. The Bank of Korea raised its key policy rate by a 50-basis-point increment, in line with expectations.

The European markets saw volatility early morning as traders sifted to the U.K. GDP data, which showed a 0.3% contraction in August, weighed down by a weak manufacturing sector and the soft performance by the oil and gas sector due to maintenance work. The major averages in the region were uniformly higher at the last check.

The Bank of England has reportedly warned that the U.K. households will likely face a strain, similar to the one seen in 2008 if economic conditions do not improve.

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Posted In: EarningsNewsGuidanceFuturesPreviewsTop StoriesEconomicsFederal ReservePre-Market OutlookMarketsTechTrading IdeasFOMC minutesNasdaq futuresS&P 500 futures
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