Market Volatility Ahead: Election and Fed Decision Loom Large
As the US presidential election and Federal Reserve policy decision approach, investors are bracing for a week of potentially huge market-moving events. The S&P 500 opened near the flatline on Monday, following a comeback to end a losing week, while the tech-heavy Nasdaq Composite fell about 0.1% and the Dow Jones Industrial Average dipped slightly.
Earnings Season Offers Some Comfort
Despite the uncertainty surrounding the election, a solid earnings season and interest rate-cut optimism are giving the market reasons to be cheerful. With 70% of the S&P 500 having reported quarterly results, the benchmark index is on pace for its fifth quarter of earnings growth in a row, rebounding from the 2023 earnings recession.
Fed Policy Meeting Takes Center Stage
The Federal Reserve’s two-day policy meeting, kicking off on Wednesday, will be closely watched by investors. Wall Street is convinced that Chair Jerome Powell will usher in a 0.25% rate cut on Thursday, despite signs of stubborn inflation and muddied job market signals. The focus will be on what the Fed might do at future meetings, with the market now seeing three fewer cuts through the end of 2025 than previously expected.
Oil Prices Jump on OPEC+ Decision
Oil prices surged nearly 3% on Monday after OPEC+ decided to delay a planned hike in output by at least a month, and Iran escalated Mideast tensions by warning of a “crushing response” to Israel’s strikes. Energy stocks also rose on Monday amid the rising oil prices.
Housing Market Struggles with Affordability
Affordability concerns are locking more potential first-time homebuyers out of the housing market. A new report shows that first-time homebuyers made up 24% of all buyers this year, marking the lowest share since 1981. High home prices, elevated borrowing costs, and low inventory have hammered affordability over the past year, leaving many first-time buyers on the fence about purchasing a home.
Market Movers to Watch
Investors will be keeping a close eye on earnings reports from companies like Super Micro Computer, Arm, and Qualcomm, as well as economic data such as factory orders and durable goods orders. The dollar dropped by the most in a month as traders unwound bets on a Trump victory, while Treasury yields also retreated, with the 10-year benchmark yield sliding almost 10 basis points to 4.30%.
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