September S&P 500 E-Mini futures (ESU24) are up +0.09%, and September Nasdaq 100 E-Mini futures (NQU24) are down -0.01% this morning as market participants braced for the Federal Reserve to lower interest rates, with opinion divided on the size of this week’s cut.
Investors were also evaluating the implications of a second assassination attempt on former President Donald Trump. Trump is safe after his Secret Service detail opened fire on a man brandishing an assault rifle at his West Palm Beach, Florida, golf course on Sunday, in what the Federal Bureau of Investigation described as an apparent assassination attempt.
In Friday’s trading session, Wall Street’s main stock indexes closed higher, with the benchmark S&P 500, blue-chip Dow, and tech-heavy Nasdaq 100 notching 2-week highs. Uber Technologies (UBER) climbed over +6% after the ride-share provider said it would expand its partnership with Alphabet’s Waymo to bring autonomous ride-hailing to Austin and Atlanta next year. Also, Arm (ARM) advanced more than +5% after Raymond James initiated coverage of the stock with an Outperform rating and a price target of $160. In addition, RH (RH) surged over +25% after the company reported stronger-than-expected Q2 results. On the bearish side, Adobe (ADBE) slid more than -8% and was the top percentage loser on the S&P 500 and Nasdaq 100 after the company provided below-consensus Q4 revenue guidance. Also, Boeing (BA) fell over -3% and was the top percentage loser on the Dow after its largest labor union went on strike, and Moody’s Ratings placed the company’s debt rating on review for a potential downgrade to junk.
Economic data released on Friday showed that the University of Michigan’s U.S. consumer sentiment index rose to a 4-month high of 69.0 in September, stronger than expectations of 68.3. Also, the University of Michigan’s September year-ahead inflation expectations ticked down for the fourth consecutive month to 2.7% from 2.8% in August, better than expectations of no change at 2.8%. In addition, the U.S. import price index fell -0.3% m/m in August, better than expectations of -0.2% m/m.
The U.S. Federal Reserve’s interest rate decision and Fed Chair Jerome Powell’s post-policy meeting press conference will take center stage in the coming week. The Federal Open Market Committee is widely expected to lower interest rates for the first time in four years on Wednesday, with anxious investors discussing whether officials will consider a quarter-point cut sufficient for an economy showing signs of slowing, or whether they will decide on a half-point reduction instead. Investor attention will also be on the central bank’s quarterly “dot plot” in its Summary of Economic Projections, which shows FOMC member forecasts regarding the path of interest rates.
Meanwhile, U.S. rate futures have priced in a 41.0% chance of a 25 basis point rate cut and a 59.0% chance of a 50 basis point rate cut at the upcoming monetary policy meeting.
“If pricing stays where it is currently, it would be the first meeting in years where there’s serious uncertainty about the rates decision,” Deutsche Bank analysts said in a note.
Market participants will also be monitoring a spate of economic data releases this week, including U.S. Retail Sales, Core Retail Sales, Industrial Production, Manufacturing Production, Business Inventories, Building Permits (preliminary), Housing Starts, Crude Oil Inventories, Initial Jobless Claims, Current Account, Philadelphia Fed Manufacturing Index, Existing Home Sales, and Leading Index.
On the earnings front, notable companies like FedEx (FDX), General Mills (GIS), Darden Restaurants (DRI), and Lennar (LEN) are set to report their quarterly figures this week.
Today, investors will likely focus on the U.S. NY Empire State manufacturing index, set to be released in a couple of hours. Economists, on average, forecast that the September NY Empire State manufacturing index will stand at -4.10, compared to last month’s value of -4.70.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 3.644%, down -0.08%.
The Euro Stoxx 50 futures are up +0.10% this morning, recovering from early losses, while investors cautiously awaited monetary policy decisions from major central banks later this week. Healthcare and utilities stocks led the gains on Monday. Final data from the statistical office Istat released on Monday showed that Italy’s annual inflation rate eased to 1.1% in August from 1.3% in July, confirming preliminary estimates. Separately, Eurostat reported on Monday that hourly labor costs in the Eurozone increased by 4.7% year-over-year in the second quarter, slowing from the revised 5% gain in the previous three-month period. Meanwhile, market participants are bracing for policy decisions from the Fed, the Bank of England, and the Bank of Japan, in addition to key economic data from the region this week. The BoE is scheduled to announce its interest rate decision on Thursday, with investors currently divided on whether it will opt for a rate cut for the second time in two months. Comments from European Central Bank officials will also capture investor attention this week, with several governors set to speak and President Christine Lagarde slated to deliver a speech in Washington on Friday. Speaking over the weekend, hawkish policymakers Joachim Nagel and Pierre Wunsch cautioned that the ECB must remain vigilant on inflation, though Wunsch acknowledged that further rate cuts are probable if the central bank’s base scenario materializes. In corporate news, Volkswagen Ag (VOW3.D.DX) dropped over -1% after Jefferies stated in a note that the German automaker might book billions of euros in provisions for planned capacity reductions as soon as the fourth quarter.
Italy’s CPI and Eurozone’s Trade Balance data were released today.
The Italian August CPI has been reported at +0.2% m/m and +1.1% y/y, in line with expectations.
Eurozone July Trade Balance was at 21.2B euros, stronger than expectations of 14.9B euros.
Markets in Japan and mainland China were closed for the holidays.
China’s Shanghai Composite Index was closed today for the Mid-Autumn Festival. Mainland China’s financial markets will reopen on Wednesday.
Japan’s Nikkei 225 Stock Index was closed today for the Respect for the Aged Day holiday. The markets will reopen on Tuesday.
Pre-Market U.S. Stock Movers
Trump Media & Technology (DJT) climbed more than +3% in pre-market trading following a second apparent assassination attempt on the Republican candidate and former president on Sunday.
Intel (INTC) gained over +3% in pre-market trading after Bloomberg News reported that the chipmaker had officially qualified for up to $3.5 billion in federal grants to make semiconductors for the Pentagon.
Entegris (ENTG) rose more than +2% in pre-market trading after Citi upgraded the stock to Buy from Neutral with a price target of $130.
Colgate-Palmolive (CL) fell over -1% in pre-market trading after Wells Fargo downgraded the stock to Underweight from Equal Weight with an unchanged price target of $100.
Ally Financial (ALLY) slid more than -1% in pre-market trading after BTIG downgraded the stock to Neutral from Buy.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Monday - September 16th
AstroNova (ALOT), Coda Octopus (CODA), RF Industries (RFIL), Vince (VNCE).
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