Benzinga - by Shanthi Rexaline, Benzinga Editor.
US stocks are on track to start the new week on an upbeat note as more earnings and the Federal Reserve’s rate decision loom. The oversold levels of the market could attract buying if the other catalysts prove to be benign.
The Fed is widely expected to announce a pause decision on Wednesday, with the futures market pricing in a 98.6% probability of a status quo stance. The market participants will likely focus on the post-meeting policy statement and Fed Chair Jerome Powell’s commentary in the following press conference.
Earnings continue to drop in, with some key reports, including from Apple, Inc. (NASDAQ:AAPL) and chipmakers Qualcomm, Inc. (NASDAQ:QCOM) and Advanced Micro Devices, Inc. (NASDAQ:AMD), likely to take center stage.
Cues From Past Week’s Trading
Mixed earnings and some strong economic data that kept bond yields elevated pressured stocks in the week ended Oct. 27. Expectations that the Fed may not have been done with its rate hikes prompted traders to prefer bonds, which are considered a relatively safer investment option than equities.The Dow Industrials ended at its lowest level since late March, and the S&P 500 Index closed at a fresh five-month low and is now in deep correction territory. The tech-heavy Nasdaq Composite Index finished just off a five-month low.
The Russell 2,000 Index, which represents small-cap names, pulled back toward to nearly a two-year low.
The Dow Industrials and the S&P 500 Index were down for a second straight week, while the Nasdaq Composite has posted weekly declines in each of the past three weeks.
US Index Performance In Week Ended Oct. 27
| Index | Performance (+/-) | Value |
| Nasdaq Composite | -2.63% | 12,643.01 |
| S&P 500 | -2.53% | 4,117.37 |
| Dow Industrials | -2.14% | 32,417.59 |
| Russell 2000 | -2.61% | 1,636.94 |
Analyst Color
An analyst suggested that there could be light at the end of the tunnel for the market. “Given how bearish the financial markets have become, and how nearly all the metrics associated with oversold conditions are pointing to an impending ‘relief’ or ‘oversold’ rally, markets appear poised for a bounce,” said Quincy Krosby, chief global strategist at LPL Financial.But most investors and traders have given up on the hopes of a higher chance of the market turning and delivering a solid finish to the year, the analyst said. “Markets have a way of dismissing consensus estimates when you least expect it,” he said, implying that stocks could push higher.
Futures Today
Futures Performance On Monday| Futures | Performance (+/-) |
| Nasdaq 100 | +0.79% |
| S&P 500 | +0.70% |
| Dow | +0.58% |
| R2K | +0.90% |
In premarket trading on Monday, the SPDR S&P 500 ETF Trust (NYSE:SPY) rose 0.68% to $413.49 and the Invesco QQQ ETF (NASDAQ:QQQ) jumped 0.82% to $348.14, according to Benzinga Pro data.
Upcoming Economic Data
The Fed meeting headlines the week’s economic events, although a few other data also have the potential to move markets. The Federal Open Market Committee – the monetary-policy setting committee of the Fed, will meet for a two-day meeting beginning on Tuesday. The central bank will announce interest rates at 2 p.m. EDT on Wednesday, followed by a press briefing by Powell at 2:30 p.m. EDT. The Fed wouldn’t be releasing its summary of economic projections this time around.Among the other market-moving reports of the week are the October non-farm payrolls report due on Friday, the third-quarter employment cost report due on Tuesday, given its implication for inflation, and the Institute of Supply Management’s manufacturing and non-manufacturing activity reports for October.
Also on investors’ radar would be the Conference Board’s consumer confidence report due on Tuesday, S&P Global’s final manufacturing and services sector activity data, and the results of the Chicago ISM’s regional business activity data.
Monday, the Treasury is set to auction three- and six-month bills at 11:30 a.m. EDT.
Stocks In Focus
- Stellantis N.V. (NYSE:STLA) and General Motors Company (NYSE:GM) rose in premarket trading after these companies reached tentative deals with the United Auto Workers union.
- Check Point Software Technologies Ltd. (NASDAQ:CHKP), JinkoSolar Holding Co., Ltd. (NYSE:JKS), McDonald’s Corporation (NYSE:MCD), ON Semiconductor Corporation (NASDAQ:ON), SoFi Technologies, Inc. (NASDAQ:SOFI) and Western Digital Corporation (NASDAQ:WDC) are among the major companies reporting their results ahead of the market open.
- Those reporting after the market close include Vornado Realty Trust (NYSE:VNO), Rambus Inc. (NASDAQ:RMBS), Wolfspeed, Inc. (NYSE:WOLF), Tenet Healthcare Corporation (NYSE:THC), Transocean Ltd. (NYSE:RIG), Pinterest, Inc. (NYSE:PINS) and Lattice Semiconductor Corporation (NASDAQ:LSCC)
Commodities, Bonds, Other Global Equity Markets
Crude oil futures fell 1.25% to $84.47 in the early European session on Monday, following past week’s 3.62% pullback.The benchmark 10-year Treasury note rose 0.026 percentage points to 4.871% on Monday.
The major Asian markets showed nervousness ahead of the U.S. Fed decision and tech earnings reports. While the Japanese market fell sharply on fears that the Bank of Japan might adjust its yield curve control policy when it announces its verdict on Tuesday, most other indices from the region showed tentativeness.
European stocks advanced on Monday and were higher by late-morning trading, with a smaller-than-expected contraction in German GDP likely offering support. That said, traders remained cautious ahead of the week’s major central bank decisions and key data and earnings.
Image: Shutterstock/ Vintage Tone
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