Wall Street Edges Up as US Election and Fed Rate Meeting Loom

U.S. stock futures ticked up slightly early Tuesday, signaling cautious optimism among investors ahead of two critical events: the U.S. presidential election and a likely Federal Reserve interest rate cut.

Futures for the S & P 500 and Dow Jones Industrial Average both gained 0.2 percent before the market opened.

Uncertainty surrounding election results, which may take days or even weeks to finalize, adds to the potential for future market fluctuations. Meanwhile, the Federal Reserve is expected to announce a second rate cut to help counterbalance economic challenges, aimed at bolstering the U.S. economy against recession fears.

“Bottom line—the U.S. election is incredibly important, but the process is likely to be incredibly noisy,” said Michael Zezas, a strategist at Morgan Stanley.

Election Day Uncertainty Adds Pressure

With Election Day nearing, the U.S. market is on edge.

Historically, stock markets have shown resilience regardless of the election’s outcome. During the last election in 2020, U.S. stocks rose even as former Republican President Donald Trump challenged the results, driven partly by optimism around a potential COVID-19 vaccine as several countries still faced quarantines.

This year, however, the higher-stakes political polarization between Trump and Democratic nominee Kamala Harris has heightened market sensitivities.

“The worst possible outcome is a contested election,” Eric Wallerstein, Chief Markets Strategist at Yardeni Research told Newsweek this week.

“Political stability is at the bedrock of the demand for U.S. assets. A contested election that prevents a winner from being named for a protracted period would hurt stocks, raise volatility, and prompt a rush into gold.”

Federal Reserve Expected to Announce Rate Cut

Adding to the week’s pressure, the Federal Reserve will convene to discuss another potential rate cut, a move that could help keep the economy steady.

Core prices have increased 2.7 percent from the year prior for three months straight.

Over recent months, concerns about inflation and economic stability have kept the Fed on a cautious path, with officials maintaining a close watch on key indicators. Last month, U.S. inflation reached its lowest point in three years.

A scenario in which interest rates curb inflation without causing a recession is described by Gregory Daco, chief economist at the tax and accounting firm EY, as “essentially the soft landing that many of us dreamed of.”

“You really have the best of both worlds, with consumer spending growth remaining resilient and inflation moving within striking distance of the Fed’s two percent target.”

Boeing, Palantir, and Dollar Tree Outcomes

Specific corporate actions have also shaped market movement this week.

Boeing shares rose nearly two percent after union workers approved a new contract, ending a seven-week strike that had stalled production lines.

This development allows Boeing to resume assembly of its popular airliner models, offering a positive signal to investors and airlines alike.

Meanwhile, software company Palantir surged 13.7 percent in premarket trading after reporting strong third quarter results.

CEO Alexander Karp attributed the growth to “unrelenting demand for AI that won’t slow down,” a sentiment that reflects the tech industry’s robust performance amid broader economic uncertainty.

Additionally, Dollar Tree’s stock increased by four percent following news of a leadership change as the retailer searches for a new CEO, with interim leadership from Chief Operating Officer Michael C. Creedon Jr. guiding its operations in the meantime.

Global Markets and Oil Prices

The market’s concerns about the U.S. are echoed internationally. Other major economies often mirror U.S. market behavior—especially in closely integrated regions.

Germany’s DAX edged up 0.1 percent, while China’s Shanghai Composite and Hong Kong’s Hang Seng saw notable gains of 2.3 percent and 2.1 percent, respectively, as investors anticipated new economic stimulus efforts.

South Korea’s Kospi dropped 0.4 percent to 2,576.88 after the military reported that North Korea had launched multiple short-range ballistic missiles into the eastern sea, marking another weapons demonstration ahead of the U.S. going to the polls.

In oil markets, U.S. crude rose to $71.76 a barrel, while Brent crude climbed to $75.39, reflecting production delays announced by major oil producers, including Saudi Arabia.

The dollar rose to 152.18 Japanese yen from 152.10 yen. The euro climbed to $1.0902 from $1.0880.

This article includes reporting from The Associated Press