The first trading session of the week for US stocks could see a mixed bag of performance as investors fully digest the odds of a rate cut by the Federal Reserve this week. While small-cap stocks are showing early strength, with the Russell 2,000 futures experiencing a solid rise, analysts and market watchers remain divided on the impact of the widely anticipated rate cut.
Some experts believe that the market could consolidate around current levels before the Fed’s interest-rate announcement, scheduled for Wednesday. Others anticipate a broadening of the recent market rally, with technology stocks potentially adding to their recent gains. However, historical data provides a counterpoint, showing that the market has often experienced a decline following a rate cut.
Upcoming economic data, including regional manufacturing activity reports, will also influence the market’s direction. Futures performance in the premarket shows the Nasdaq 100 down by 0.29%, the S&P 500 down by 0.04%, the Dow up by 0.17%, and the Russell 2000 up by 0.58%.
Last week, Wall Street saw a strong rally, reversing the previous week’s tech-led sell-off. Benign inflation data fueled the market’s resurgence, with the S&P 500 and the Nasdaq Composite indices posting gains in all five trading days. These averages recorded their best weekly gains for the year.
Analysts are cautiously optimistic, highlighting the remarkable turnaround from the previous week’s slump. Carson Group Chief Market Strategist Ryan Detrick notes that the S&P 500’s 4% drop followed by a 4% rise in consecutive weeks is historically a strong indicator of future market performance. He suggests that based on historical trends, the market has a higher probability of being higher a year later following such a pattern.
The upcoming week will be dominated by the Federal Open Market Committee meeting, with the odds favoring a 50 basis-point rate cut over a 25 basis-point cut. The post-meeting policy statement, the Summary of Economic Projections, and Chairman Jerome Powell’s press briefing will all be closely watched for potential market-moving developments.
In addition to the Fed’s decision, traders will also be analyzing August retail sales data, the industrial production report, regional manufacturing activity readings, and housing market reports.
On Monday, the New York Federal Reserve will release the results of its Empire State manufacturing survey. The business activity index is projected to have worsened from -4.7 in August to -5 in September, suggesting continued contraction.
Several individual stocks are also in focus, including Trump Media & Technology Group Corp., Apple, Inc., and Intel Corporation. Trump Media & Technology Group Corp. saw a premarket rise following a second assassination attempt against its owner and presidential candidate Donald Trump. Apple, Inc. experienced a decline on reports of lower-than-expected preorders for the Pro series, while Intel Corporation gained on reports of a $3.5 billion deal to supply chips to the US military.
Commodities markets saw modest gains in crude oil and gold futures, while the benchmark 10-year Treasury note remained largely unchanged. Bitcoin experienced a pullback to the $58.5K mark. Asian markets, with the exception of New Zealand, closed higher for the day, reflecting Wall Street’s strong finish last Friday. The New Zealand market pulled back after the nation’s central bank maintained interest rates and hinted at a delay in rate cuts due to persistent inflation. The Chinese, Japanese, and South Korean markets remained closed for public holidays. European stocks were slightly lower in early trading.
