US stock markets are poised for a positive start on Monday, with futures indicating gains across major indices. The Nasdaq 100, S&P 500, and Dow Jones futures are all trading higher, signaling a potential rebound after a mixed week. While the S&P 500 and Dow Jones snapped their six-week winning streak, the Nasdaq Composite notched its seventh consecutive week of gains.
The upcoming earnings season is expected to provide support, with five of the “Magnificent Seven” tech giants set to report their financial results this week. Apple Inc. (AAPL), Microsoft Corp. (MSFT), Alphabet Inc. (GOOG, GOOGL), Meta Platforms Inc. (META), and Amazon.com Inc. (AMZN) will be closely watched by investors as their performance could provide insights into the health of the technology sector and the overall economy.
In premarket trading, the SPDR S&P 500 ETF Trust (SPY) is up 0.64% to $582.72, while the Invesco QQQ ETF (QQQ) has gained 0.77% to $499.11.
Last Week’s Market Dynamics
Last week, the market was grappling with several factors. Geopolitical tensions in the Middle East, with Israel’s missile strikes in Iran, led to a decline in oil prices. Rising treasury yields sparked concerns about the long-term trajectory of US national debt, particularly in light of upcoming elections and potential fiscal challenges. The International Monetary Fund’s warnings on the US national debt further exacerbated these concerns.
Despite these headwinds, economic data provided some optimism. The University of Michigan consumer sentiment index rose to 70.5 in October, up from the preliminary reading of 68.9.
Analysts’ Perspectives
Despite the recent market volatility, analysts remain optimistic about the market’s prospects. Ryan Detrick, Chief Market Strategist at Carson Group, highlighted that this was the best “Sell in May” period since 2009, defying historical trends. He attributed the strength in the market to a resilient bull market and positive economic fundamentals. Detrick believes that the best six months of the year for equity markets are “right around the corner.”
However, Nathan Peterson, Director of Derivatives Analysis at the Schwab Center for Financial Research, cautions that rising treasury yields could potentially dampen investor sentiment, especially as the earnings season kicks off. He warns of potential selling pressure and increased market volatility in the coming week, particularly leading up to the elections.
Economic Calendar
The economic calendar for the week is packed with key releases that could influence market sentiment. On Monday, the Dallas Fed Manufacturing Business Index for October will be released. Tuesday will see data on retail (ex-auto) and wholesale inventory, as well as the House Price Index. Wednesday’s highlights include Q3 GDP numbers, Q3 Real Consumer Spending data, and Pending Home Sales. Thursday will feature jobless claims and the Core PCE price index, while Friday will bring the highly anticipated payroll data.
Stocks in Focus
In premarket trading, Exxon Mobil Corp. (XOM) and Occidental Petroleum Corp. (OXY) are down over 2% due to falling crude oil prices. Delta Air Lines Inc. (DAL) is up over 2% after the company sued CrowdStrike Holdings Inc. (CRWD) for the July IT outage, claiming damages exceeding $500 million. Taiwan Semiconductor Manufacturing Co. Ltd. (TSM) shares have fallen 1.7% after cofounder Morris Chang warned of challenges due to growing threats to the free trade of chips amidst geopolitical tensions. Investors are eagerly awaiting earnings results from ON Semiconductor Corporation (ON), Waste Management, Inc. (WM), and Ford Motor Company (F) today.
Commodities, Bonds, and Global Markets
Crude oil futures tumbled in early New York trading, falling by nearly 6%, driven by Israel’s strikes on Iran. The 10-year Treasury note yield surged to 4.254%. Asian markets closed mixed on Monday, while European stocks displayed caution and were mostly lower in early trading.
With the earnings season kicking off this week, the US stock market is entering a crucial period. While positive sentiment persists, investors will need to navigate potential headwinds from rising interest rates and geopolitical uncertainties.
