US Stock Futures Edge Higher Amid Cautious Optimism; Analyst Says How Fed Packages Sept. Pause Key For Market Direction
Stock futures point to a cautiously optimistic start on Monday as traders look ahead to the Federal Reserve’s interest rate decision due on Wednesday. The only notable piece of economic data for Monday is a housing market reading due after the market opens. Given a lack of any major cues, traders will likely stay focused on the bond yields, the direction of oil prices, and analysts’ take on the Fed decision.
Cues From Past Week’s Trading:
Stocks closed little changed in the week ended Sept. 15, and traders reacted to a slew of catalysts, including data showing a slight pick up in inflation at both wholesale and retail levels, a spike in oil prices to a 10-month high, Arm Holdings plc‘sARM initial public offering, Apple, Inc. AAPL iPhone launch event and strike threat by the United Auto Worker’s union.
The major averages showed a lack of clear direction as they swayed to these catalysts. The S&P 500 and the Nasdaq Composite indices fell for a second straight week, as the two averages pulled back to their lowest level since late August.
US Index Performance In Week Ended Sept. 15
| Index | Performance (+/-) | Value |
| Nasdaq Composite | -0.39% | 13,708.33 |
| S&P 500 Index | -0.16% | 4,450.32 |
| Dow Industrials | +0.12% | 34,618.24 |
| Russell 2000 | -0.24% | 1,847.03 |
Analyst Color:
All that matters this week is “how the Fed packages the expected pause,” said LPL Financial Chief Global Strategist Quincy Krosby. “Given the UAW strike with the potential for a substantial pay package, coupled with labor’s recent successful negotiations, underpinning a broad swath of higher wages, the FOMC is faced with a likelihood of resulting higher prices,” the analyst said.
The higher prices at the pump haven’t yet manifested in inflation expectations, but typically, as prices continue to edge higher, expectations will also rise, he said.
“How the Fed delivers the pause is crucial for November and December rate expectations, but whether it’s presented with a dovish or hawkish tilt is what matters most for financial markets,” Krosby said. He expects Fed Chair Jerome Powell to emphasize that the central bank will remain data-dependent.
“Financial markets are even more keenly data dependent, and the wrapping of the pause, with a dovish or hawkish angle, is key for the market’s direction,” he added.
Futures Today
Futures Performance On Monday
| Futures | Performance (+/-) |
| Nasdaq 100 | +0.18% |
| S&P 500 | +0.14% |
| Dow | +0.11% |
| R2K | +0.20% |
In premarket trading on Monday, the SPDR S&P 500 ETF Trust SPY gained 0.14% to $444.01, and the Invesco QQQ ETF QQQ rose 0.13% to $370.76, according to Benzinga Pro data.
The CBOE Volatility Index futures, aka the fear index, slipped 0.27% to 15.65.
Upcoming Economic Data:
The unfolding week’s economic events are headlined by the Federal Open Market Committee’s two-day monetary policy meeting beginning on Tuesday. The central bank will announce its verdict at 2 p.m. on Wednesday, which will be followed by a press conference hosted by Powell at 2:30 p.m. EDT. Along with the monetary policy statement, the Fed will also release its summary of economic projections, including the all-important dot-plot curve.
A few housing market readings. the Conference Board’s August leading economic index, Fed speeches post the rate decision, and flash S&P Global manufacturing and services purchasing managers’ readings for September are among the other key Main Street catalysts for the week.
On Monday, the National Association of Home Builders will release the results of its housing market survey for September at 10 a.m. EDT. Based on the survey, the housing market index is expected to remain unchanged at 50, a level suggesting neither expansion nor contraction.
The Treasury will auction three- and six-month Treasury bills at 11:30 a.m. EDT.
See also: Best Futures Trading Software
Stocks In Focus:
- Apple, Inc. AAPL rose about 0,50% in premarket trading as analysts suggest preorders for its high-end iPhones, especially the pricier iPhone 15 Pro Max, have been strong.
- Stitch Fix, Inc. SFIX is scheduled to release its quarterly results after the market close.
- PTC Therapeutics, Inc. PTCT fell about 5% after Raymond James double downgraded the stock to an Underperform.
Commodities, Bonds, Other Global Equity Markets:
Crude oil futures extended their gains and were up 0.66% to $90.61 in early European session on Monday. Oil was on a boil in the past week, as the commodity added 3.73% for the week ended Sept. 15 amid supply concerns.
The benchmark 10-year Treasury note rose 0.025 percentage points to 4.347% on Monday.
Most Asian markets ended Monday’s session lower as they reacted to the Friday’s negative close by Wall Street stocks. The week’s central bank decisions in Japan, the U.S., and the U.K. also served to keep sentiment muted. The Chinese and New Zealand markets, however, bucked the downtrend, while the Japanese market was closed for a public holiday.
European stocks pulled back and were found in the red by late-morning deals on Monday.