Election & Fed Decision Loom: Market Braces for Volatility

Market Anticipation Builds Ahead of Election and Fed Decision

The US stock market is bracing for a pivotal week, with the presidential election and Federal Reserve policy meeting on the horizon. Despite a solid earnings season and interest rate-cut optimism, investors are preparing for potential volatility.

Election Day Looms Large

The neck-and-neck presidential race has Wall Street on edge, with Kamala Harris and Donald Trump vying for the top spot. Weekend polls showed Harris gaining ground, leading to a surprise lead in Iowa and a shift in betting markets. The dollar dropped significantly, and Treasury yields retreated as traders unwound bets on a Trump victory.

Fed Policy Meeting Kicks Off

The Federal Reserve’s two-day policy meeting begins on Wednesday, with a 0.25% rate cut widely expected. However, the focus is on future meetings, with the market now anticipating three fewer cuts through 2025 than previously expected.

Earnings Season Rolls On

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. Beleaguered companies like Super Micro Computer, Arm, and Qualcomm are set to report this week.

Oil Prices Surge

Oil prices jumped nearly 3% after OPEC+ delayed a planned hike in output by at least a month. The move comes amid escalating Mideast tensions, with Iran warning of a “crushing response” to Israel’s strikes.

Stocks in Focus

Peloton shares rose after Bank of America analysts upgraded the stock to a Buy from Neutral, citing optimism over the fitness equipment maker’s new leadership. Constellation Energy stock fell as much as 12% amid a broader decline in nuclear power stocks following the US government’s rejection of a Big Tech nuclear power agreement.

Housing Market Struggles

A new report showed that first-time homebuyers made up just 24% of all buyers this year, marking the lowest share since 1981. High home prices, elevated borrowing costs, and low inventory have hammered affordability, leaving many potential buyers on the fence about purchasing a home.

Economic Data Ahead

This week’s economic data includes factory orders and durable goods orders for September. Earnings reports are also due from Berkshire Hathaway, Cleveland-Cliffs, and Marriott International, among others.

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