Market Anticipation Builds Ahead of Election and Fed Decision
As the United States prepares to elect a new president, Wall Street futures are on the rise, signaling a potentially eventful week ahead. The Federal Reserve is also expected to make a move, with a likely cut to its benchmark policy rate.
Presidential Election Takes Center Stage
A new poll shows Democratic candidate Kamala Harris leading in Iowa, ahead of the Tuesday vote. This development has sparked a shift in market sentiment, with stocks tied to Republican candidate Donald Trump’s chances of victory taking a hit. Trump Media & Technology Group and Phunware, a software developer that created apps for Trump’s 2020 campaign, both saw significant declines in premarket trading.
Betting Odds Shift in Favor of Harris
According to betting site PredictIT, Harris is now favored to win, with odds standing at 55 cents to Trump’s 53 cents. This marks a significant shift from last week, when Trump was favored with odds of 61 cents to Harris’s 42 cents.
Market Reaction Mixed
Despite the uncertainty surrounding the election outcome, Dow E-minis, S&P 500 E-minis, and Nasdaq 100 E-minis all saw modest gains, rising 0.06%, 0.17%, and 0.1%, respectively. However, the CBOE’s VIX measure of expected equity volatility remains elevated, trading at 22.38, well above its 30-day moving average.
Fed Rate Cut Expected
Investors are largely convinced that the Federal Reserve will cut interest rates by 25 basis points at its November meeting, despite a weaker-than-expected October nonfarm payrolls number. The decision is expected on Thursday, and could have significant implications for the market.
Earnings Season Heats Up
Wall Street had closed higher on Friday, but all three major indexes fell on a weekly basis, driven by mixed earnings from technology megacaps. Chip heavyweight Nvidia saw a 2.1% gain, while Intel shares dropped 1.8%. Hotel operator Marriott International lost 3.6% after cutting its 2024 profit forecast, and Constellation Energy dropped 9.1% after missing estimates for operating income. Around 102 S&P 500 companies are expected to report quarterly earnings in the coming week.
Other Key Indicators to Watch
Investors will also be keeping a close eye on September U.S. factory orders, due at 10:00 a.m. ET. With so much uncertainty surrounding the election outcome and Fed decision, market volatility is likely to remain high in the coming days.
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