The new week on Wall Street is kicking off with a hint of uncertainty, as US stock futures are trading modestly lower on Monday morning. The S&P 500, though just shy of its record high, is seeing some hesitancy from traders, who are likely taking a wait-and-see approach before diving into new positions, especially ahead of the week’s crucial labor market data.
The Federal Reserve’s stance and regional manufacturing activity reports will also be closely watched, with speeches by Federal Reserve officials, including Chair Jerome Powell, likely to influence trading direction. Sentiment is further dampened by the looming strike by the International Longshoremen’s Association, threatening to cripple supply chains and potentially disrupt holiday sales and essential goods.
Fund manager Louis Navellier warned clients that even a two-week strike could have significant consequences, disrupting the flow of drugs and other vital products. In premarket trading, the SPDR S&P 500 ETF Trust (SPY) dipped 0.03% to $571.29, while the Invesco QQQ ETF (QQQ) fell 0.04% to $486.55.
Last week saw a third consecutive week of gains for US stocks, fueled by optimistic bets on continued rally into the fourth quarter, driven by the Federal Reserve’s promise of continued rate hikes. China’s economic stimulus efforts boosted demand for China-exposed stocks, while positive earnings from Micron Technology, Inc. (MU) gave a lift to the tech sector. The Dow Industrials closed the week at fresh intraday and closing highs, with the S&P 500 just narrowly missing its all-time peak.
However, the strong September gains come with a cautionary note, according to Carson Group Chief Investment Strategist Ryan Detrick. While the S&P 500 Index is close to achieving a 20% year-to-date gain heading into October for the first time since 1997, this has historically been followed by a decline in seven out of nine instances. Despite the potential for October weakness, Detrick notes that the fourth quarter has historically delivered an average return of 4.1% in these years, suggesting a reason for optimism.
The week ahead is packed with important economic data releases, including a quartet of employment reports, highlighting the non-farm payrolls data for September, ADP private payrolls data, the August Job Openings and Labor Turnover survey data, and the weekly jobless claims. Traders will also be scrutinizing private sector activity reports. On Monday, Federal Reserve Governor Michelle Bowman is scheduled to speak at 8:50 a.m. EDT, followed by the release of the ISM-Chicago regional manufacturing survey results at 9:45 a.m. EDT. The Chicago business barometer is expected to show a reading of 45.3 for September, indicating a further decline from August’s 46.1, suggesting a faster rate of contraction. The Treasury will auction three- and six-month bills at 11:30 a.m. EDT, with Powell addressing the National Association for Business Economics in Nashville, Tennessee, at 1:55 p.m. EDT.
Carnival Corporation & plc (CCL) is scheduled to announce its quarterly results before the market opens. Crypto-linked stocks are experiencing a downturn, mirroring the softness seen in digital currencies. MicroStrategy, Inc. (MSTR) and Coinbase Global, Inc. (COIN) witnessed declines of over 5.70% and 4.40% respectively, in premarket trading. Chinese EV startup Nio, Inc. (NIO) surged over 13% after the company announced additional financing from strategic investors, further buoyed by optimism surrounding China’s stimulus measures. Peers XPeng, Inc. (XPEV) and Li Auto, Inc. (LI) also saw gains, rising over 8.40% and 7.50% respectively. Other US-listed Chinese stocks, including Alibaba Group Holding Limited (BABA), JD.com, Inc. (JD), and Baidu, Inc. (BIDU), also rallied.
Crude oil futures dipped slightly, trading below $68, while gold futures, despite trading off their record highs, remain modestly higher. Bitcoin (BTC/USD) fell over 3% in the past 24 hours, trading around $63.6K. The yield on the 10-year Treasury ticked up slightly to 3.779%. Global equity markets presented a mixed picture, with the Japanese market plunging 4.80%, driven by uncertainty over the newly elected prime minister’s policies. Meanwhile, China’s key market gauge rallied over 8% after domestic private sector activity data came in weaker than expected, fueling hopes of additional stimulus measures. The Hong Kong market also surged, with the Australian and Singaporean markets also posting gains, though at a more modest level. Sentiment across the Atlantic remains negative, with most major markets in Europe trading significantly lower in early trading.
