Futures climb on bets of end to Fed's rate hikes

1 month ago 24

Traders work on the floor of the NYSE in New York

Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., October 27, 2023. REUTERS/Brendan McDermid Acquire Licensing Rights

  • Futures up: Dow 0.32%, S&P 0.50%, Nasdaq 0.67%

Nov 2 (Reuters) - Wall Street futures on Thursday got a boost from hopes that the Federal Reserve had reached the end of its tightening campaign, while a number of upbeat corporate forecasts also lifted sentiment.

The Fed held interest rates steady on Wednesday, as expected, and while Chair Jerome Powell left the door open to further tightening, he also acknowledged the impact of a recent surge in bond yields on the economy.

The comments, which were perceived to be dovish, sent U.S. Treasury yields tumbling, with the benchmark 10-year yield hitting a fresh two-week low.

That, in turn, fuelled gains in mega-cap growth stocks. Microsoft (MSFT.O), Nvidia (NVDA.O) and Tesla (TSLA.O) rose between 0.8% and 2.2% in premarket trading on Thursday.

"Overall, markets interpreted the meeting to have been dovish," said Charu Chanana, market strategist at Saxo Markets in a note.

"Given the weakening consumer and business confidence trends and rising risks of delinquencies, the odds remain tilted to suggest that we have reached an end of the Fed's tightening cycle."

Traders pared back the risk of a December hike to about 20% and a January move to 25%, according to the CME Group's FedWatch tool. They have also priced in a 70% chance that the tightening is over.

U.S. equities have kicked off November on a brighter note -- after a gruelling October marred by fears of higher-for-longer interest rates and geopolitical tensions -- though a mixed bag of earnings reports have kept a lid on sentiment.

However, with the third-quarter earnings season now well beyond the halfway point, the more recent quarterly reports from major Wall Street companies were upbeat.

Shares of Qualcomm(QCOM.O) climbed 4.7% after the chip designer forecast first-quarter sales and profits above Wall Street estimates as the slowdown in smartphone sales eases.

PayPal Holdings (PYPL.O) advanced 6.9% as the payments giant raised its full-year adjusted profit forecast.

Apple's (AAPL.O) results will grab the spotlight late on Thursday, while Starbucks (SBUX.O), Eli Lilly (LLY.N) and Marriott (MAR.O) are due to report earnings before markets open.

Overall, analysts estimate S&P 500 companies' profit rose 5% in the third quarter, higher than the 1.6% growth forecast at the start of October, per LSEG data.

Investors will also parse a report on factory orders for September, due at 10 a.m. ET. The main data point of the week, however, will be the October non-farm payrolls report on Friday, which will offer more clarity on the state of the labor market.

At 5:14 a.m. ET, Dow e-minis were up 108 points, or 0.32%, S&P 500 e-minis were up 21.25 points, or 0.5%, and Nasdaq 100 e-minis were up 99.25 points, or 0.67%.

SolarEdge Technologies (SEDG.O) dropped 18.4% following the solar inverter maker's downbeat fourth-quarter revenue outlook.

Albemarle (ALB.N) slipped 4.6% as the lithium producer trimmed its annual sales forecast.

Reporting by Amruta Khandekar; Editing by Savio D'Souza

Our Standards: The Thomson Reuters Trust Principles.

Read Entire Article