Home » Dow Jones Futures Fall: Fed Pivot Hopes Fueling Market Rally Face Big Test

Dow Jones Futures Fall: Fed Pivot Hopes Fueling Market Rally Face Big Test

by WorldFinance
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Dow Jones futures fell modestly Monday morning, along with S&P 500 futures and Nasdaq futures, with earnings season still in full swing. But the focus this week will be on a pivotal Federal Reserve meeting, as well as the October jobs report.

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The stock market rally had a volatile week but ultimately showed resilience and strength amid sell-offs in Microsoft (MSFT), Meta Platforms (META), Amazon.com (AMZN) and Google parent Alphabet (GOOGL). The Dow Jones, Russell 2000 and, ultimately, the S&P 500, cleared their 50-day lines. The Nasdaq did not, but rebounded for strong weekly gains as Apple (AAPL) soared on its quarterly results.

Earnings season remains packed with top companies reporting. Arista Networks (ANET), Albemarle (ALB), CF Industries (CF), Cheniere Energy (LNG) and Quanta Services (PWR) report this coming week. ANET stock, Albemarle, CF, Cheniere and Quanta Services are all close to potential buy points.

Here’s a bonus stock: On Semiconductor (ON), often known as Onsemi, reported better-than-expected Q3 results before Monday’s open. ON stock closed Friday near a trendline entry, but fell slightly in premarket trade. This EV chipmaker has shown wild stock action in the past few months.

LNG stock is on IBD Leaderboard, while ALB stock and CF Industries are on the Leaderboard watchlist. Arista Networks and CF stock are on the IBD 50 list.

The video embedded in this article highlighted a pivotal market week, while also analyzing Arista Networks, Albemarle and LNG stock.

Fed Meeting

The Federal Reserve meets on Nov. 1-2, with policymakers set to raise rates yet again. Some relatively tame inflation data and various central bank moves and signals around the world have bolstered hopes that the Fed will soon pivot to smaller rate hikes.

Markets still strongly expect that the Fed will increase rates by 75 basis points for a fourth straight meeting, though there is now a small chance of just a half-point move. But for the December meeting, the betting has shifted toward a half-point Fed rate hike.

So investors will pay close attention to the Fed policy statement at 2 p.m. ET Wednesday, and especially Fed chief Jerome Powell’s news conference at 2:30 p.m., for any Fed pivot hints.

But there will still be a lot of Fed-moving economic data before the year-end Fed meeting, including two jobs reports. The October jobs report is due this coming Friday, three days after the September JOLTS survey. Signs of an easing labor market could reinforce Fed pivot hopes. But robust hiring and falling unemployment could signal further big rate hikes and a higher end point.

Economists expect October nonfarm payrolls to rise 210,000. That would be a solid gain, but the third straight month slowing hiring and the smallest increase since December 2020.

Dow Jones Futures Today

Dow Jones futures declined 0.5% vs. fair value. S&P 500 futures sank 0.5% and Nasdaq 100 futures fell 0.6%. Futures are off overnight lows.

The 10-year Treasury yield rose 3 basis points to 4.04%.

Crude oil futures fell more than 1%, while natural gas prices spiked more than 10%. Copper futures sank over 1%.

China manufacturing and services PMI indexes fell back below the break-even 50 level, signaling contraction. Increasing Covid curbs in the past few weeks are taking their toll on the Chinese economy, along with overseas weakness.

Leftist former leader Luiz Inacio Lula da Silva won Sunday’s runoff presidential election, narrowly defeating right-wing President Jair Bolsonaro. Petrobras (PBR), the state-owned oil giant, tumbled on concerns that Lula will shift its focus to social needs over profits and shareholder returns.

Wheat futures jumped as Russia exited a deal letting Ukraine ship crops from the Black Sea.

Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

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