S&P 500, Nasdaq Futures On Backseat As Fresh Trading Week Starts With Spotlight On Fed Decision — Apple, Tesla, Brazilian Stocks In Focus

Zinger Key Points
  • The Fed's monetary policy-setting arm, the FOMC, kickstarts a 2-day meeting on Tuesday.
  • Tamer than expected hike could spark a relief rally, although consensus view is another 75 basis point upward adjustment is likely.

Trading in the major U.S. index futures is pointing to a negative opening by Wall Street stocks on Monday, as rate fears return. Whatever Monday’s session brings, the three major averages are on track to end October with strong gains.

U.S. Indices' Performance In Week Ended Oct. 28
Index Performance (+/-)   Value
Nasdaq Composite +2.24%   11,102.45
S&P 500 Index +3.95%   3,901.06
Dow Industrials +5.72%   32,861.80

The Dow Industrials ended the week at its highest level in more than two months and the S&P 500 Index settled near a one-and-a-half-month high. Apple, Inc.’s AAPL forecast-beating results and rate optimism imparted strength to the market, which was otherwise weighed down by several other tech disappointments.

“Overall, the 3Q earnings season continues to deliver strong results and gives hope that the economy can absorb the higher interest rates the Fed has planned,” said fund manager Louis Navellier in a note released last week.

Here’s a peek into index futures trading:

U.S. Futures' Performance On Monday During Premarket Session
Index Performance (+/-)  
Nasdaq 100 Futures -0.62%  
S&P 500 Futures -0.46%  
Dow Futures -0.35%  
R2K Futures -0.49%  

In premarket trading on Monday, the SPDR S&P 500 ETF TrustSPY fell 0.47% to $387.21 and the Invesco QQQ TrustQQQ declined 0.56% to $279.64, according to Benzinga Pro data.

On the economic front, the Chicago Federal Reserve’s regional purchasing managers’ index for October is due at 9:45 a.m. EDT. This will be followed by the Dallas Federal Reserve’s manufacturing business index for October, due at 10 a.m. EDT.

All eyes, however, will be on the two-day Federal Open Market Committee meeting that would kickstart on Tuesday. Most economists and market analysts are resigned to a fourth 75-basis-point hike at the upcoming meeting.

Goldman Sachs economists said in a note released on Saturday that the terminal rate — the peak rate in a Fed’s tightening cycle before it begins to pivot, could be 4.75%-5% and that the Fed may go on hiking until March, according to Bloomberg.

More importantly, market participants will likely scan the language of the post-meeting policy statement to see if there is any leeway for a letup in the central bank’s aggressive stance.

See also: Fidelity Macro Expert Puzzled With Fed's Extreme Actions: 'Inflation Will Presumably No Longer Be Clear, Present Danger'

Stocks In Focus:

Apple slipped moderately in premarket trading after its supply chain partner Hon Hai Precision Manufacturing Company Limited HNHPF went into closed-loop production amid the COVID-19 resurgence, potentially disrupting 10% of global iPhone production capacity.

Tesla, Inc. TSLA declined by over 1%.

Brazilian oil and gas company Petróleo Brasileiro S.A. - Petrobras PBR fell over 10% and miner Vale S.A. VALE moved down over 3%, seemingly in reaction to the election of a left-leaning president by the country.

Global Payments, Inc. GPN and ON Semiconductor Corp. ONN are the notable names reporting ahead of the market open.

Avis Budget Group, Inc. CAR, IMAX Corporation IMAX, Lattice Semiconductor Corp. LSCC, NXP Semiconductor N.V. NXPI are due to release their earnings reports after the market close.

Commodities, Other Global Equity Markets:

Crude oil futures declined steeply on Monday, with prices falling for a second straight session. A barrel of WTI-grade crude oil traded around the $86.5 barrel mark.

Most markets in the Asia-Pacific region advanced on Monday, encouraged by the buoyancy seen on Wall Street for most of last week. The Hong Kong and Chinese markets bucked the downtrend amid the COVID-19 resurgence in mainland China.

European stocks traded mixed in late morning trading, as traders digested earnings from the region and looked ahead to the FOMC meeting that begins Tuesday.

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Posted In: EarningsNewsFuturesPreviewsSmall CapTop StoriesEconomicsFederal ReserveAfter-Hours CenterMarketsTrading IdeasNasdaq futureS&P 500 futuresUS Stocks
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