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U.S. Stock Futures Rise Ahead of Critical Week

Last updated on October 29, 2023

U.S. stock futures began the week on a positive note, as a significant week lies ahead, marked by a Federal Reserve rate decision, the release of a jobs report, and Apple’s earnings announcement.

S&P 500 futures rose by 0.3%, while Nasdaq-100 futures gained 0.4%. Dow Jones Industrial Average futures also showed an uptick of 0.1%.

In the previous week, the S&P 500 entered a correction phase, declining by 2.5% over the week, bringing its total fall from the 2023 high to 10.6%. October has been unkind to the benchmark, currently down by 4%, potentially marking its third consecutive month of losses, a feat not seen since the onset of the pandemic in 2020.

The Federal Reserve’s decision, scheduled for Wednesday, is closely watched. The central bank is widely anticipated to maintain its benchmark interest rate at the current level. Given that escalating interest rates are the primary driver of the stock market’s correction, investors are eager to see signals from the Fed that it may halt further rate hikes. Traders are generally expecting the Fed to keep rates steady through at least the remainder of 2023.

The 10-year Treasury yield did briefly cross the 5% mark at the beginning of the prior week, but it ultimately concluded at 4.84%. The October jobs report, set for release on Friday, is anticipated to provide insights into a potential slowdown in the labor market, a factor that could influence the Fed’s decision to maintain interest rates unchanged for the rest of the year.

Apple is slated to release its earnings report after the bell on Thursday. The technology giant, the largest component of the S&P 500, has also experienced a correction, with a 15% drop from its 52-week high.

The recent market decline has been particularly centered on the Nasdaq and technology stocks, which investors perceive as most vulnerable to rising interest rates. The Nasdaq Composite has fallen by more than 12% from its 2023 peak, firmly entering correction territory. Notably, the Nasdaq, Dow, and S&P 500 are all on track for their third consecutive month of negative performance. Weak earnings reports from prominent technology companies, such as Google-parent Alphabet, have contributed to the ongoing market downturn.

Significant Terms:

  • Federal Reserve Rate Decision: A monetary policy decision by the U.S. Federal Reserve to determine the benchmark interest rate.
  • 10-Year Treasury Yield: The yield on the 10-year U.S. Treasury note, often used as a benchmark for interest rates in the broader economy.
  • Correction: A decline of at least 10% from a recent high in a financial market, typically applied to stock prices.
  • Benchmark Interest Rate: The central interest rate set by a country’s central bank, which influences lending rates and overall economic activity.
  • Earnings Report: A company’s financial statement detailing its financial performance, including revenues, expenses, and profits, typically released quarterly or annually.

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