Benzinga - by Shanthi Rexaline, Benzinga Editor.
Stock futures are modestly higher Tuesday as traders look ahead to the day's Fed speeches and inflation reports due in the upcoming sessions.
U.S. stocks could be prepping for a cautious start on Tuesday, as evident from the modestly higher stock futures. PepsiCo, Inc.‘s (NASDAQ:PEP) strong third-quarter report should pep up expectations concerning a positive earnings season. Bond yields continue to ease as traders bake in expectations for a pause at the month-end Federal Reserve rate-setting meeting.
That said, the inflation reports due Wednesday and Thursday could serve to keep sentiment guarded. Traders may also closely monitor the message relayed by a trio of Fed speeches scheduled for the day.
Cues From Monday’s Trading:
Stocks advanced on Monday as traders showed resilience and looked past the geopolitical tensions set in motion by the Israeli-Hamas conflict. The major indices opened lower and languished mostly in negative territory until the mid-session.
A steady recovery followed, taking the averages past the flat line, as Fed officials hinted at less likelihood of a rate hike in the aftermath of rising bond yields. The indices consolidated their gains in late-afternoon trading.
The major averages all closed higher for a second straight session, ending at their highest levels since late September.
All the S&P 500 sector classes gained ground in the session, with energy stocks outperforming among the pack. Industrial, real-estate, and utility stocks also saw notable gains.
US Index Performance On Monday
| Index | Performance (+/-) | Value |
| Nasdaq Composite | +0.39% | 13,484.24 |
| S&P 500 Index | +0.63% | 13,484.24 |
| Dow Industrials | +0.59% | 33,604.65 |
| Russell 2000 | +0.60% | 1,755.99 |
The Federal Reserve could relent in the wake of the Middle East tensions, said LPL Financial Chief Economist Jeffrey Roach. As of Monday, the probability of an increase in the fed funds target rate at the Oct. 31-Nov. 1 meeting fell to roughly 10% as investors anticipate the conflict will put a brake on the global economy.
Fund manager Louis Navellier said, “The wall of worry is clearly higher, but the immediacy of earnings season will draw the most focus unless the Mideast conflict spills into a much larger story.” Even in the event of the escalation of tension, he sees bond yields falling on expectations that the Fed will not make any move higher until things stabilize. A potential energy price spike that could threaten the reignition of inflationary pressure may not alter the view much, he added.
Futures Today
Futures Performance On Tuesday
| Futures | Performance (+/-) |
| Nasdaq 100 | +0.21% |
| S&P 500 | +0.18% |
| Dow | +0.19% |
| R2K | +0.22% |
Upcoming Economic Data:
Atlanta Fed President Raphael Bostic, a Federal Open Market Committee member, is scheduled to speak at 9:30 a.m. EDT.
The Commerce Department will release its wholesale inventories report for August at 10 a.m. EDT. Economists, on average, expect a 0.1% month-over-month drop in wholesale inventories compared to a 0.2% decline in July.
The New York Fed is due to release its consumer inflation expectations report for September at 11 a.m. EDT. In August, the median one- and five-year-ahead inflation expectations rose slightly, both increasing by 0.1 percentage points to 3.6% and 3.0%, respectively.
The Treasury will auction three- and six-month Treasury notes at 11:30 a.m. EDT and three-year notes at 1 p.m. EDT.
Fed Governor Christopher Waller is scheduled to speak at 1:30 p.m. EDT, followed by Minneapolis Fed President Neel Kashkari at 3 p.m. EDT. Kashkari is also a member of the FOMC, the rate-setting committee of the Fed.
Stocks In Focus:
- UnitySoftware, Inc. (NYSE:U) rose over 7.50% in premarket trading after the company named former IBM and Red Hat executive James Whitehurst as interim CEO and Roelof Botha as chairman. It added that John Riccitiello, who previously adorned the CEO, would retire.
- Rivian Automotive, Inc. (NASDAQ:RIVN) gained more than 3% following an upgrade of the stock by UBS.
- PepsiCo rose over 2% following its beat-and-raise third quarter.
Crude oil futures fell 0.50% to $85,95 in early European session on Tuesday following Monday’s 4.34% rally in reaction to the Israeli-Hamas conflict.
The benchmark 10-year Treasury note fell 0.106 percentage points to 4.676%.
Among the global equity markets, the Asian markets rallied hard on Tuesday following the resilience shown by the U.S. market on rate pause expectations. The Chinese and South Korean markets, however, bucked the uptrend.
European stocks advanced strongly and were solidly higher in late-morning trading on Tuesday.
Read Next: Why This CBOE Global Markets Analyst Is Bullish At Time Of Geopolitical Turmoil
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