The December S&P 500 E-Mini futures (ESZ25) are showing a slight decline of -0.02% this morning, following a record-breaking rally. Investors are eagerly anticipating the start of the Federal Reserve’s two-day policy meeting, a new round of corporate earnings reports, and U.S. private-sector economic data.
Yesterday, Wall Street’s main stock indexes closed at all-time highs. The Magnificent Seven stocks saw significant gains, with Tesla (TSLA) rising over +4% and Nvidia (NVDA) climbing more than +2% to lead gainers in the Dow. Qualcomm (QCOM) surged over +11%, becoming the top percentage gainer on the S&P 500 and Nasdaq 100 after introducing new chips and computers for the AI data center market. Avidity Biosciences (RNA) also saw a substantial increase of more than +42% after Novartis announced its plans to acquire the company in a deal valued at about $12 billion. On the flip side, rare earth stocks experienced a decline after Treasury Secretary Scott Bessent hinted at China postponing the implementation of stricter export controls on rare earths, with USA Rare Earth (USAR) dropping over -8% and MP Materials (MP) falling more than -7%.
The Federal Reserve is expected to initiate a 25 basis point rate cut during its two-day meeting, following last Friday’s favorable September inflation data. This move would bring the Fed funds rate to a range of 3.75% to 4.00%, the lowest level since late 2022. Investors will closely monitor Chair Jerome Powell’s post-policy meeting press conference for insights into future interest rate changes. U.S. money markets have almost fully priced in another rate cut in December.
The third-quarter corporate earnings season is in full swing, with investors eagerly awaiting new reports from prominent companies like Visa (V), UnitedHealth Group (UNH), Booking (BKNG), United Parcel Service (UPS), and PayPal (PYPL). According to Bloomberg Intelligence, S&P 500 companies are expected to report an average +7.2% increase in quarterly earnings for Q3 compared to the prior year, marking the smallest rise in two years.
Chris Larkin from E*Trade at Morgan Stanley commented, “With the Fed on track to cut rates, extending the run would appear to hinge on this week’s lineup of high-profile earnings releases. And it may, barring any surprises in U.S.-China trade negotiations.”
On the economic data front, investors will be paying close attention to the release of the U.S. Conference Board’s Consumer Confidence Index, which is forecasted to stand at 93.4 for October, compared to last month’s figure of 94.2. Additionally, the U.S. Richmond Fed Manufacturing Index is expected to come in at -11 in October, compared to the previous value of -17.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is currently at 3.973%, down -0.58%.
Asian stock markets closed in the red today, with China’s Shanghai Composite Index (SHCOMP) ending down -0.22% and Japan’s Nikkei 225 Stock Index (NIK) closing down -0.58%. China’s Shanghai Composite Index saw a decline amid profit-taking ahead of a high-stakes meeting between U.S. President Donald Trump and Chinese leader Xi Jinping. Non-ferrous metal stocks led the declines on Tuesday.
Japan’s Nikkei 225 Stock Index closed lower as investors locked in profits following Monday’s rally. Energy and industrial stocks led the declines on Tuesday. The Japanese currency strengthened after U.S. Treasury Secretary Scott Bessent and Japanese Finance Minister Satsuki Katayama discussed exchange rate volatility.
In pre-market trading, United Parcel Service (UPS) surged over +9% after reporting stronger-than-expected Q3 results and issuing above-consensus Q4 revenue guidance. UnitedHealth Group (UNH) also rose more than +4% after posting better-than-expected Q3 results and raising its full-year adjusted EPS guidance. Qorvo (QRVO) saw a jump of over +10% after reports of Apple supplier Skyworks Solutions considering acquiring the company. NXP Semiconductors N.V. (NXPI) gained more than +2% after providing a stronger-than-expected Q4 revenue forecast. However, Rambus (RMBS) tumbled over -17% after reporting weaker-than-expected Q3 EPS.
Today’s U.S. earnings spotlight features a wide range of companies, including Visa (V), UnitedHealth (UNH), NextEra Energy (NEE), Booking (BKNG), American Tower (AMT), Royal Caribbean Cruises (RCL), Sherwin-Williams (SHW), Mondelez (MDLZ), Ecolab (ECL), Corning (GLW), and many more.
In conclusion, the financial markets are buzzing with activity as investors eagerly await the outcome of the Federal Reserve’s policy meeting, corporate earnings reports, and economic data releases. Stay tuned for more updates on market developments and trends.
