Benzinga - by Shanthi Rexaline, Benzinga Editor.
The market may open the week on a cautious note due to escalating tensions in the Middle East caused by violent rocket attacks from the Palestinian militant group Hamas on Israel. Israel’s determination to respond to these attacks has dented risk appetite. However, gains in energy stocks and defense contractors could partially offset the negative sentiment.
Additionally, traders are bracing for the start of the third-quarter reporting season and closely monitoring inflation data scheduled for the week, which could introduce an element of caution.
Cues From Last Week’s Trading:
Last week, the market saw a series of fluctuations as traders reacted to various developments. The major stock indices experienced a mix of gains and losses before closing the week ending Oct. 6 with mixed results. Concerns about rising interest rates persisted throughout the week, leading to bond yields reaching their highest levels in 16 years. Surprisingly, traders responded positively to a strong monthly jobs report released on Friday, possibly driven by oversold conditions and anticipation of the upcoming earnings season.
Tech stocks outperformed, with the Nasdaq Composite posting a weekly gain of over 1.50%, marking its second consecutive week of gains. The S&P 500 Index also broke a five-week losing streak by advancing during the week. However, small-cap stocks faced selling pressure, with the Russell 2000 Index in negative territory for the year-to-date period.
US Index Performance In Week Ended Oct. 6
| Index | Performance (+/-) | Value |
| Nasdaq Composite | +1.60% | 13,431.34 |
| S&P 500 Index | +0.48% | 4,308.50 |
| Dow Industrials | -0.30% | 33,407.58 |
| Russell 2000 | -2.22% | 1,745.56 |
Analyst Color:
The real takeaway from this week, the first of October, is that a terrible September may be behind us, said Brad McMillan, chief investment officer at Commonwealth Financial Network. The real economy is in good shape and the markets are processing rising rates and are now showing signs that they can rally, even as rates move higher, the analyst said.
“And if inflation keeps trending down (and we will find that out next week), then for all the doom and gloom, the foundation is still solid,” he added.
Futures Today
Futures Performance On Monday
| Futures | Performance (+/-) |
| Nasdaq 100 | -0.70% |
| S&P 500 | -0.55% |
| Dow | -0.44% |
| R2K | -0.88% |
In premarket trading on Monday, the SPDR S&P 500 ETF Trust (NYSE:SPY) slumped 0.59% to $427 and the Invesco QQQ ETF (NASDAQ:QQQ) fell 0.74% to $362, according to Benzinga Pro data.
Upcoming Economic Data:
The unfolding week’s economic calendar is all about inflation, which has a huge bearing on what the Federal Reserve will do when it meets for two days beginning on Oct. 31. The consumer price inflation report for September is due on Thursday. the producer price inflation report, also for September, due on Wednesday, and the University of Michigan’s preliminary October consumer sentiment data due on Friday are among the key reports on investors’ radar.
Traders may also keep an eye on the Fed speeches scheduled for the week and the minutes of the September Federal Open Market Committee meeting, where the central bank led by Chair Jerome Powell kept the fed funds rate unchanged at 5.25%-5.50%.
Monday, Dallas Fed President Lorie Logan, who is a member of the FOMC, is scheduled to speak at 9 a.m. EDT. Philip Jefferson, the vice chair of the Fed’s board of governors, is due to speak at 1:30 p.m. EDT.
See also: Best Futures Trading Software
Stocks In Focus:
Walt Disney Co. (NYSE:DIS) rose over 1.40% in premarket trading after a Wall Street Journal report said activist investor Nelson Peltz has upped his stake in the company and would seek for more board seats.
Nvidia Corp. (NASDAQ:NVDA) fell 2.41% amid rumors of Microsoft Corp. (NASDAQ:MSFT) readying an in-house AI chip.
Energy stocks Exxon Mobil Corp. (NYSE:XOM), ConocoPhillips (NYSE:COP), and Chevron Corp. (NYSE:CVX) all rallied following the spike in oil prices in the aftermath of the developments in the Middle East. Defense stocks Lockheed Martin Corp. (NYSE:LMT), Northrop Grumman Corporation (NYSE:NOC) and other defense contractors also rallied amid fears concerning a looming regional war in the region.
Mirati Therapeutics, Inc. (NASDAQ:MRTX) slipped over 2% despite the company announcing a deal to be bought by Bristol-Myers Squibb Co. (NYSE:BMY) for $5.8 billion, including $4.8 billion or $60 per share in cash, and a non-tradeable Contingent Value Right. potentially worth $12.00 per share in cash, representing an additional $1 billion of value opportunity.
Commodities, Bonds, Other Global Equity Markets:
Crude oil futures rallied 3.80% to $85.94 in early European session on Monday amid the intensifying geopolitical tensions. The commodity closed the week ended Oct. 6 down 8.81%. Analysts are of the view that oil may see a knee-jerk reaction in reaction to the weekend conflict but they warn of serious ramifications if it escalates into a regional crisis.
The yield on the benchmark 10-year Treasury yield rose 0.079 percentage points to 4.795%.
Asian equities resisted large-scale sell-off, although Japan, South Korea, Taiwan, and Hong Kong remained closed for public holidays. The Chinese market, which reopened after a weeklong holiday, and the New Zealand markets fell moderately, while Australia's market closed in the green. The rest of the major markets saw muted sentiment.
European stocks traded modestly to moderately lower in late-morning trading on Monday.
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