Dow Jones, Nasdaq 100 Futures Advance on Trade Hopes; Services PMI Up Next
According to the CME FedWatch Tool, the probabilities of 25-basis point Fed rate cuts in October and December stand at 98.3% and 93.4%, respectively.
US Economic Data in Focus
Across the Pacific, US economic data could influence the Fed’s monetary policy stance and risk sentiment.
Economists forecast the S&P Global Services PMI to fall from 54.2 in September to 53.5 in October. A sharper drop in the headline PMI, falling prices, and job cuts could fuel speculation about more aggressive rate cuts. A softer PMI could lift sentiment. However, stagflation fears may rise if it drops below the 50 neutral level, potentially triggering a flight-to-safety.
On the other hand, a higher headline PMI reading, rising prices, and increased headcounts could temper bets on a December Fed rate cut, weighing on risk assets.
The Services PMI will be the first major data release since the prelim University of Michigan Survey of Consumer Sentiment on October 10, exposing traders to potential market volatility.
The Services PMI will be the key data release. However, the finalized University of Michigan Survey of Consumer Sentiment also requires consideration.
According to the preliminary survey, the Michigan Consumer Sentiment Index slipped from 55.1 in September to 55.0 in October. A downward revision would support a more dovish Fed rate path, given that waning sentiment could signal a pullback in consumer spending. Weaker spending may dampen demand-driven inflation. Conversely, an upward revision may ease expectations of aggressive Fed rate cuts.
Key Technical Levels for Dow Jones, Nasdaq 100, and S&P 500
Following the morning gains, US stock futures held above key technical levels, reaffirming the bullish momentum.
However, the near-term trends hinge on US-China trade developments and US economic data. Key levels traders should monitor include:
Dow Jones
- Resistance: 47,000, the October 21 record high of 47,334, then 47,500.
- Support: 46,750, 46,500, the 50-day EMA (46,081).