In a relatively quiet start to the week, stock futures remained largely unchanged Monday evening after a strong rally earlier. Key developments could hold significant implications for market direction in the days ahead, including anticipated earnings from major technology companies, a crucial Federal Reserve rate decision, and the prospects of a trade agreement with China.
Futures associated with the Dow Jones Industrial Average saw an uptick of approximately 22 points, while S&P futures showed a slight increase and Nasdaq 100 futures were up by 0.1%. The previous trading session ended on a high note, with the S&P 500 achieving its first-ever close above the 6,800 mark, and the tech-centric Nasdaq Composite and Dow Jones Industrial Average also reaching record highs. Additionally, the Russell 2000 small-cap index celebrated a new all-time record.
Investor sentiment was buoyed by declining hostilities between the U.S. and China, especially in light of an upcoming meeting between President Donald Trump and Chinese President Xi Jinping scheduled for Thursday. The two nations have reportedly agreed on a preliminary framework for a potential trade deal that addresses restrictions on China’s rare earth minerals, soybean purchases, and the popular app TikTok.
Tuesday marks the beginning of a two-day meeting of the Federal Reserve, with expectations set on another rate cut this year. Market participants anticipate insights from Fed Chair Jerome Powell on Wednesday, particularly regarding a potential additional cut at the final meeting of the year in December. These expectations have been fueled in part by concerns surrounding a weakening labor market, although the ongoing U.S. government shutdown complicates the Fed’s ability to analyze economic data comprehensively.
Investors are also gearing up for a slew of earnings reports from some of the so-called “Magnificent Seven” tech stocks set to be released on Wednesday and Thursday. These include major players like Alphabet, Amazon, Apple, Meta Platforms, and Microsoft, which together represent about a quarter of the entire S&P 500’s market value. Despite the uncertainties, the third-quarter earnings season has thus far shown strong performance.
LPL Financial’s chief technical strategist, Adam Turnquist, commented on the recent market behavior, attributing the buying pressure to a combination of robust earnings, signs of easing inflation, expectations for further rate cuts, and the confirmation of the Trump-Xi meeting later this week. He noted that fundamental performance will be a key focus as 30 companies within the Nasdaq 100 report their earnings.
In after-hours trading, stocks like Nucor and Cadence Design Systems reacted to their earnings results, while Amazon announced plans to initiate layoffs on Tuesday, marking the largest reductions in its workforce in the company’s history. This news contributes to the ongoing trend of job cuts in the tech industry this year, underscoring the challenges faced by the sector in a shifting economic landscape.
