US stock futures hovered around the flatline on Monday as investors prepared for a packed week, featuring the US presidential election, multiple corporate earnings releases, and a significant Federal Reserve interest rate decision.
Last week’s positive close was driven largely by Amazon’s (NASDAQ
) strong quarterly results, which helped offset the dip in US job growth attributed to recent hurricanes and labor strikes. The US economy added only 12,000 jobs in October, falling far short of analyst expectations.
Election Focus
With the US presidential election tomorrow, the race between Republican candidate Donald Trump and Democratic contender Kamala Harris remains extremely close. Key polls show Harris slightly leading in pivotal states, but the race is expected to be neck and neck. The outcome could heavily influence the markets, depending on the policy direction from the winning administration.
Earnings Releases & Key Reports
This week, approximately 20% of companies in the S&P 500 are set to report earnings. Thus far, 70% of these companies have reported, with 75% of them beating per-share earnings expectations, according to FactSet – consistent with the long-term trend but slightly below recent years. Major names to watch include Super Micro Computer (NASDAQ
), a key Nvidia partner, as well as Qualcomm (NASDAQ
), Moderna (NASDAQ
), and CVS Health (NYSE
).
On Thursday, the Federal Reserve is expected to announce a 25-basis point interest rate cut, following last month’s significant 50-basis point reduction. The latest data, which shows a cooling labor market, has fueled expectations for this smaller rate cut. Investors will be closely watching Fed Chair Jerome Powell’s comments to gauge the pace of potential future cuts.
Oil Market Update
Oil prices rose after OPEC+ delayed a planned production increase, reflecting potential concerns over global demand. The Organization of the Petroleum Exporting Countries and its allies announced they would postpone a planned output increase of 180,000 barrels per day by at least one month, marking the second such delay.
Technical Levels to Watch
For the past six weeks, markets have been largely rangebound, with multiple attempts to break either side of the current range. This week, key support for the current range sits around the 20,000 level. If buyers defend this zone, we could see retests of 20,500, 20,750, and 21,000. However, if the 20,000 level fails, price action may trend down toward 19,850 and 19,550, where buying could potentially resume.
Quick Reference:
Upside levels of interest: 20500, 20750, 21000
Downside levels of interest: 20000, 19850, 19550
Notable Economic Data
- Tuesday: U.S. Elections
- Thursday: Jobless claims, FOMC
- Friday: Michigan Consumer Sentiment
Tips for Trading This Volatile Week
Given the heightened volatility expected with the election and Fed decision, we suggest that new traders stick with lighter positions and follow our proven systems for managing risk. By doing so, you can capitalize on opportunities without exposing yourself to excessive risk.
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