December S&P 500 E-Mini futures (ESZ25) are up +0.36%, and December Nasdaq 100 E-Mini futures (NQZ25) are up +0.55% this morning, pointing to a higher open on Wall Street as investors wager that a resilient economy and further rate cuts from the Federal Reserve will continue to underpin corporate earnings.
However, gains in equity futures are limited as the U.S. government shutdown extends into another week. Higher bond yields today are also limiting gains in stock index futures.
This week, investors will focus on developments surrounding the government shutdown, the minutes of the Fed’s latest policy meeting, and comments from Fed officials.
In Friday’s trading session, Wall Street’s major equity averages closed mixed. Humana (HUM) surged over +10% and was the top percentage gainer on the S&P 500, extending Thursday’s gains after it reaffirmed its full-year earnings guidance. Also, Rumble (RUM) jumped more than +15% after announcing a partnership with Perplexity to integrate the company’s AI tools to improve video discovery on its platform. In addition, USA Rare Earth (USAR) climbed over +14% after CEO Barbara Humpton told CNBC that the company was “in close communication” with the White House. On the bearish side, Palantir Technologies (PLTR) slid more than -7% and was the top percentage loser on the S&P 500 and Nasdaq 100 following a report that the company’s battlefield communications system had serious flaws, a claim the company denied.
Economic data released on Friday showed that the U.S. ISM services index fell to a 4-month low of 50.0 in September, weaker than expectations of 51.8. At the same time, the U.S. September S&P Global services PMI was revised higher to 54.2 from the preliminary reading of 53.9.
Chicago Fed President Austan Goolsbee reiterated on Friday that policymakers should move cautiously with rate cuts as they navigate pressure to balance their inflation and employment goals. Also, Dallas Fed President Lorie Logan stated that the central bank remains further from achieving its inflation target than its maximum employment goal and reiterated that officials should take a cautious approach to cutting interest rates. In addition, Fed Vice Chair Philip Jefferson said, “With respect to the path of the policy rate going forward, I will continue to evaluate the appropriate stance of monetary policy based on the incoming data, the evolving outlook, and the balance of risks.” Finally, Fed Governor Stephen Miran said he would revise his inflation outlook if housing costs were to jump unexpectedly.
U.S. rate futures have priced in a 94.6% chance of a 25 basis point rate cut and a 5.4% chance of no rate change at the Fed’s monetary policy committee meeting later this month.
Investor attention this week will center on developments surrounding the U.S. government shutdown, with tensions likely to rise if President Trump proceeds with his threat to fire, rather than furlough, federal workers. If the shutdown continues, official U.S. economic data will likely be delayed, including August trade data on Tuesday and weekly jobless claims on Thursday. However, several noteworthy economic releases are still anticipated, including the University of Michigan’s preliminary Consumer Sentiment Index and the Fed’s Consumer Credit report. Should the shutdown end, delayed official data such as the September jobs report could be released during the week.
Market watchers will also parse the Fed’s minutes from the September 16-17 meeting, set for release on Wednesday, for insights into policymakers’ appetite for another rate cut. The FOMC cut interest rates last month for the first time this year, though subsequent public comments from various officials suggest there is division over how urgently further action should be taken.
“Any insights on the future policy rate path and views [on] the double-sided risks to employment and inflation will be closely watched by market participants,” HSBC economists said in a note.
Fed Chair Jerome Powell will deliver pre-recorded welcoming remarks at the Community Bank Conference on Thursday. Treasury Secretary Scott Bessent and Fed Vice Chair for Supervision Michelle Bowman are set to participate in a “fireside chat” at the event. Also, Kansas City Fed President Jeff Schmid, Atlanta Fed President Raphael Bostic, Fed Governor Stephen Miran, Minneapolis Fed President Neel Kashkari, Fed Governor Michael Barr, San Francisco Fed President Mary Daly, Chicago Fed President Austan Goolsbee, and St. Louis Fed President Alberto Musalem will be making appearances throughout the week.
In addition, several notable companies, including soda and snack maker PepsiCo (PEP), carrier Delta Air Lines (DAL), Corona and Modelo parent Constellation Brands (STZ), and spice and condiments manufacturing firm McCormick & Company (MKC), are set to report their quarterly figures this week.
Meanwhile, e-commerce giant Amazon (AMZN) will host its Prime Big Deal Days sales event on October 7th-8th. Also, ChatGPT maker OpenAI will hold its DevDay developer conference later today, which analysts say may feature new announcements and updates.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.150%, up +0.73%.
The Euro Stoxx 50 Index is down -0.56% this morning, dragged down by French stocks after Prime Minister Sebastien Lecornu resigned after less than a month in the role, raising concerns about further political turmoil in the country. Lecornu’s resignation came a day after President Emmanuel Macron named a new cabinet that drew widespread criticism, with the hard-left France Unbowed party announcing plans to file an immediate no-confidence motion. Bank stocks tumbled on Monday. Consumer products and construction stocks also lost ground. Limiting losses, energy and technology stocks advanced. Meanwhile, a survey released on Monday showed that investor morale in the Eurozone improved more than anticipated in October amid an overall pickup in global economic sentiment. Separately, data from Eurostat showed that Eurozone monthly retail sales rebounded slightly in August, signaling a modest degree of resilience in the economy despite U.S. tariffs and political uncertainty. In other news, JPMorgan upgraded its view on the Eurozone to Overweight from Neutral on Monday, saying that the region’s equities have become more appealing following months of underperformance and policy support. European Central Bank Chief Economist Philip Lane said on Monday that the bank will closely monitor any changes in the Eurozone’s inflation risk profile, adding that the case for additional policy easing would grow if the risk of undershooting the target increased. Investor attention now turns to ECB President Christine Lagarde’s testimony before lawmakers in the European Parliament later today. Later this week, investors will closely watch the release of the accounts of the ECB’s September meeting. In corporate news, SEB SA (SK.P.DX) plummeted over -20% after the kitchenware maker cut its full-year guidance.
Eurozone’s Sentix Investor Confidence Index and Eurozone’s Retail Sales data were released today.
The Eurozone October Sentix Investor Confidence Index came in at -5.4, stronger than expectations of -7.5.
Eurozone August Retail Sales rose +0.1% m/m, in line with expectations.
Japan’s Nikkei 225 Stock Index (NIK) closed up +4.75%, while mainland China’s financial markets were closed for a holiday.
Japan’s Nikkei 225 Stock Index closed sharply higher and hit a new record high today as sentiment got a boost after Sanae Takaichi won the leadership election of the ruling Liberal Democratic Party. Takaichi, who is poised to become Japan’s next Prime Minister, supports increased government spending to strengthen Japan’s manufacturing base and food security, as well as investments in nuclear energy, AI, and other high-tech sectors. “Takaichi is seen as pro-stimulus and likely to pursue easier fiscal and monetary policies,” Jefferies economist Mohit Kumar said in a note. Chip-related stocks rallied on Monday as traders rushed into trades expected to benefit from more government spending under Sanae Takaichi’s premiership. Defense stocks also surged on expectations of increased military spending under a Takaichi administration, with Mitsubishi Heavy Industries jumping over +11%. Meanwhile, the yen weakened sharply, and short-term government bond yields fell on Monday, reflecting expectations that the Bank of Japan will move slowly on rate hikes, while super-long-dated yields climbed amid anticipation of fiscal expansion. Still, Takuji Aida, widely regarded as one of Takaichi’s closest economic policy advisers, said on Monday that she would likely tolerate another 25-basis-point rate hike by January next year if the economy remains solid. In other news, the BOJ on Monday kept its economic assessments unchanged for eight regions, noting their economies were recovering moderately or gaining momentum, while downgrading the assessment for one area. Investors are now awaiting BOJ Governor Kazuo Ueda’s speech on Wednesday for fresh clues on the central bank’s rate path. In corporate news, Nikon climbed about +5% after EssilorLuxottica raised its stake in the maker of cameras and other optics equipment to above 10%. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +11.59% to 27.72.
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
Advanced Micro Devices (AMD) soared over +24% in pre-market trading 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.
Tesla (TSLA) gained more than +2% in pre-market trading after the electric vehicle maker shared a video on Sunday teasing an October 7th event.
Micron Technology (MU) rose over +3% in pre-market trading after Morgan Stanley upgraded the stock to Overweight from Equal Weight with a price target of $220.
Cryptocurrency-exposed stocks are moving higher in pre-market trading after the price of Bitcoin hit a new all-time high over the weekend. Strategy (MSTR) is up more than +2%. Also, MARA Holdings (MARA) is up over +3%, and Coinbase (COIN) is up more than +2%.
Comerica (CMA) climbed over +11% in pre-market trading after Fifth Third Bancorp agreed to acquire the company in a $10.9 billion deal.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Monday - October 6th
Constellation Brands A (STZ) and Aehr Test Systems (AEHR).
