December S&P 500 E-Mini futures (ESZ25) are down -0.04%, and December Nasdaq 100 E-Mini futures (NQZ25) are down -0.01% this morning, taking a breather after hitting fresh records in the prior session, while the deadlock between Republicans and Democrats in Washington continues.
The U.S. government shutdown has entered its seventh day, with no resolution in sight. President Trump appeared to question the possibility of talks with Democrats to end the shutdown after the Senate failed for a fifth time late Monday to pass a short-term funding bill. The Senate voted 52-42 to advance a House-passed stopgap bill that would keep the government funded through November 21st. However, Republicans need 60 votes, while holding only 53 seats.
In yesterday’s trading session, Wall Street’s main stock indexes ended mixed, with the S&P 500 and Nasdaq 100 notching new record highs. Advanced Micro Devices (AMD) jumped over +23% and was the top percentage gainer on the S&P 500 and Nasdaq 100 after announcing a deal with OpenAI to roll out AI infrastructure, which the company said could bring in tens of billions of dollars in new revenue. Also, Tesla (TSLA) climbed more than +5% after the electric vehicle maker shared a video on Sunday teasing an October 7th event. In addition, Comerica (CMA) surged over +13% after Fifth Third Bancorp agreed to buy the regional lender for about $10.9 billion in stock. On the bearish side, Applovin (APP) tumbled more than -14% and was the top percentage loser on the S&P 500 and Nasdaq 100 after Bloomberg reported that the SEC was probing the company’s data-collection practices.
“We’re in a self-fulfilling rally — earnings are strong and getting stronger, investors are shrugging off a lack of data, and even a government shutdown can’t shake their confidence,” said Mark Hackett at Nationwide. “And with half of the past decade’s returns typically coming in Q4, the main story right now is momentum.”
Kansas City Fed President Jeff Schmid said on Monday that policymakers should continue pressing against inflation, which has remained persistently high. “With inflation still too high, monetary policy should lean against demand growth to allow the space for supply to grow and relieve price pressures in the economy,” Schmid said. He reiterated that interest rates remain only “slightly restrictive,” a stance he described as appropriate.
Meanwhile, U.S. rate futures have priced in a 92.5% probability of a 25 basis point rate cut and a 7.5% chance of no rate change at the conclusion of the Fed’s October meeting.
On the trade front, President Trump is scheduled to meet with Canadian Prime Minister Mark Carney later today. The Canadian Prime Minister is pushing for tariff relief in key sectors, including autos and steel.
In light of the government shutdown, the publication of August trade data, originally set for today, will likely be delayed.
Still, the Fed’s Consumer Credit report will be released today. Since the Fed isn’t financed through the congressional appropriations process, it continues its schedule as planned. Economists expect the U.S. Consumer Credit to stand at $12.90 billion in August, compared to the previous figure of $16.01 billion.
In addition, market participants will be looking toward speeches from Fed officials Bostic, Bowman, Miran, and Kashkari.
On the earnings front, spice and condiments manufacturing firm McCormick & Company (MKC) is set to report its quarterly results today.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.173%, up +0.17%.
The Euro Stoxx 50 Index is down -0.04% this morning, struggling for direction as investors weigh the renewed political turmoil in France and look for fresh market catalysts. French President Emmanuel Macron gave his outgoing Prime Minister, Sebastien Lecornu, until Wednesday night to reach an agreement with France’s political parties in a final attempt to prevent the country from sliding further into crisis. Mining and healthcare stocks underperformed on Tuesday. Limiting losses, energy and luxury stocks advanced. Data from the federal statistics office released on Tuesday showed that Germany’s factory orders unexpectedly fell for the fourth consecutive month in August, as tariff uncertainty during the summer weighed on international demand. Meanwhile, a survey showed that sentiment among small- and medium-sized German businesses turned positive for the first time since 2022, as more firms expressed optimism. In corporate news, Shell Plc (SHEL.LN) rose over +1% after signaling higher liquefied natural gas production and improved gas trading performance for the third quarter. At the same time, B&M European Value Retail S.A. (BME.LN) slumped more than -8% after the discount retailer projected a drop in first-half core earnings and full-year profit.
Germany’s Factory Orders data was released today.
The German August Factory Orders unexpectedly fell -0.8% m/m, weaker than expectations of +1.2% m/m.
Japan’s Nikkei 225 Stock Index (NIK) closed up +0.01%, while China’s financial markets were closed for a holiday.
Japan’s Nikkei 225 Stock Index closed just above the flatline today. The benchmark index initially climbed as much as 1%, with chip stocks tracking their U.S. peers higher after Advanced Micro Devices’ blockbuster deal with OpenAI, but gave up most of those gains by the close as investors took profits from the recent rally. Kazuaki Shimada, chief strategist at IwaiCosmo Securities, said, “Investors booked profits at a high of the Nikkei, so the gains were muted, but the momentum is still strong.” Strength in automobile stocks lent support to the overall market on Tuesday as the yen weakened further amid expectations of looser fiscal and monetary policy in Japan following Sanae Takaichi’s victory in the ruling Liberal Democratic Party’s leadership election. Japanese Finance Minister Katsunobu Kato said on Tuesday that the government will remain vigilant against excessive volatility in the currency market. Meanwhile, Japanese government bond yields retreated from record highs on Tuesday after a closely watched 30-year bond auction attracted solid demand. Analysts said that fiscal concerns have eased somewhat after Takaichi named former Prime Minister Taro Aso, known for his commitment to fiscal discipline, as the party’s vice president. On the economic front, data showed that Japanese household spending rose more than expected in August, with consumers remaining relatively optimistic, a positive sign for the recovery in private consumption. Separately, preliminary data showed that Japan’s leading economic indicators index, which gauges the economic outlook for a few months ahead based on data such as job offers and consumer sentiment, rose to a 5-month high in August. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed down -2.74% to 26.96.
The Japanese August Household Spending rose +0.6% m/m and +2.3% y/y, stronger than expectations of +0.1% m/m and +1.4% y/y.
The Japanese August Leading Index stood at 107.4, stronger than expectations of 107.1.
China’s Shanghai Composite Index was closed today for the National Day holiday. Mainland China’s financial markets will reopen on Thursday, October 9th.
Pre-Market U.S. Stock Movers
International Business Machines (IBM) climbed over +3% in pre-market trading after announcing a strategic partnership with Anthropic to integrate its Claude AI model into IBM’s software.
Netflix (NFLX) gained nearly +1% in pre-market trading after Seaport Research upgraded the stock to Buy from Neutral with a price target of $1,385.
Constellation Brands (STZ) rose over +3% in pre-market trading after the Corona and Modelo parent reported better-than-expected Q2 results.
Trilogy Metals (TMQ) spiked about +170% in pre-market trading after the U.S. government said it will acquire a 10% stake in the company and approve the construction of a road linking the remote Alaskan district where it operates.
Aehr Test Systems (AEHR) plummeted more than -21% in pre-market trading after the maker of semiconductor equipment swung to a loss on a GAAP basis and declined to reinstate its formal guidance.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Tuesday - October 7th
McCormick & Company (MKC) and Saratoga Investment Corp (SAR).
