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Tag: Stock Index Futures

  • Wall St futures flat in countdown to Nvidia results

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    (Reuters) -U.S. stock index futures were flat on Wednesday, as investors stepped aside in anticipation of AI leader Nvidia’s earnings release that will test Wall Street’s broader technology-led rally.

    The chip major was at the forefront of the market recovery after April’s lows, crossing the $4-trillion market capitalization mark in July to become the world’s largest company as investors continued to bet on the global demand for artificial-intelligence infrastructure.

    The company’s results come at a time when traders have been worried the tech sector – that makes up nearly 50% of the S&P 500 – might be overvalued. Valuations of the benchmark index are well above long-term averages, according to data compiled by LSEG.

    The concerns weighed on the tech sector last week after OpenAI CEO Sam Altman spoke of a potential bubble and a study from the Massachusetts Institute of Technology showed that AI tools were only a boost to individual productivity, and not corporate earnings.

    Nvidia’s shares edged up 0.5% in premarket trading, ahead of its earnings, which are expected after markets close. Options traders are pricing in about a $260-billion swing in the chipmaker’s market value after the results.

    How the company’s significant China business fared during the Sino-U.S. trade war earlier this year will be closely watched along with how a recent revenue-sharing deal with the U.S. government will impact forecasts.

    “In the same way Apple symbolized the smartphone era, Nvidia now defines the AI era. The stock has become the heartbeat of the market,” said Josh Gilbert, market analyst at eToro.

    “Regardless of whether you own Nvidia shares or not, its result will impact your portfolio in some way.”

    At 05:26 a.m. ET, Dow E-minis rose 25 points, or 0.05%, S&P 500 E-minis were up 2.5 points, or 0.04%, and Nasdaq 100 E-minis gained 6 points, or 0.03%.

    Microsoft and Meta, top customers of the chip leader, were broadly subdued, as were semiconductor stocks Broadcom and Advanced Micro Devices.

    Markets were also stabilizing following an initial decline on Tuesday, after U.S. President Donald Trump attempted to fire Federal Reserve governor Lisa Cook.

    The move is likely to face legal challenges, but if successful, it could allow Trump to nominate a dovish-leaning official to the central bank board and worry investors concerned about the U.S. Federal Reserve’s independence.

    Investors are pricing in a 25-basis-point interest-rate cut in September, according to data compiled by LSEG, and most big brokerages also lean in that direction.

    Richmond Fed President Thomas Barkin’s comments will be scrutinized later in the day for his perspective on the monetary policy outlook.

    MongoDB jumped 29.8% after the software-maker raised its annual profit forecast.

    Cracker Barrel gained 6.5% after the restaurant chain said it would stick with its decades-old logo as plans for a new one faced social media backlash.

    U.S.-listed shares of Canada Goose rose 8.6% after a report said controlling shareholder Bain Capital had received bids to take the luxury goods maker private.

    Quarterly reports from retailers including Abercrombie & Fitch and Kohl’s are also due on the day.

    (Reporting by Johann M Cherian in Bengaluru; Editing by Pooja Desai)

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  • Wall St futures slip after tech selloff; earnings, Fed meet in focus

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    (Reuters) -U.S. stock index futures declined on Wednesday, following a tech selloff on Wall Street, as investors geared up for more retail earnings and a crucial Federal Reserve symposium later this week.

    The tech sector was behind much of the market recovery from the April selloff, but investors have started to take stock of the elevated valuations, sending the S&P 500 and the Nasdaq to their worst day in more than two weeks on Tuesday.

    Deepening concerns of government interference with companies, sources said the Trump administration was looking into taking equity stakes in chip companies in exchange for grants under the CHIPS Act – just weeks after signing unprecedented revenue-sharing deals with Nvidia and AMD.

    Nvidia, Advanced Micro Devices and Intel were marginally lower in premarket trading. Nvidia is expected to report quarterly results on Aug. 27.

    “For now, this looks like a mild and possibly necessary correction after an extremely strong run for this space,” said AJ Bell’s head of financial analysis, Danni Hewson.

    “Nvidia’s quarterly earning next week now look even more crucial than they already were.”

    A slew of earnings from big-box retailers are also in the spotlight now as investors seek a clearer picture on discretionary spending at a time when consumer sentiment has taken a hit from concerns around tariffs pushing up prices in the months ahead.

    Lowe’s declined 1% a day after rival Home Depot missed expectations on quarterly results.

    Estee Lauder fell 4.3%, while Target and TJX Companies were marginally lower ahead of their respective reports. Walmart’s results are due on Thursday.

    At 05:37 a.m. ET, Dow E-minis were down 69 points, or 0.15%, S&P 500 E-minis were down 8.5 points, or 0.13%, and Nasdaq 100 E-minis were down 40.25 points, or 0.17%.

    Minutes from the Fed’s July meeting, where interest rates were left unchanged, are expected at 2:00 p.m. ET. It could set the tone before the central bank’s highly anticipated conference in Jackson Hole, Wyoming, between August 21 and 23.

    Chair Jerome Powell is expected to speak on Friday and his remarks will be scrutinized for any clues on monetary policy, even as investors price in a 25-basis-point interest rate cut in September, according to data compiled by LSEG.

    Traders “remain wary that Powell could strike a more hawkish tone, emphasizing tariff-driven inflation risks and pushing back against the degree of easing expected by the market,” said Bas Kooijman, CEO of DHF Capital S.A.

    Remarks from Governor Christopher Waller and Atlanta Fed President Raphael Bostic are expected later in the day.

    Recent economic data has suggested that the economy is yet to feel the full impact of tariffs and strategists expect the lingering uncertainty to temper market optimism, leaving the benchmark S&P 500 to potentially end the year just below current near-record levels.

    On the trade front, the Commerce Department slapped 50% import levies on more than 400 “derivative” steel and aluminum products.

    Among others, Futu Holdings gained 4.3% after reporting a jump in quarterly revenue.

    (Reporting by Johann M Cherian in Bengaluru; Editing by Devika Syamnath)

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  • Futures lackluster with inflation data, Fed Chair Powell speech on tap

    Futures lackluster with inflation data, Fed Chair Powell speech on tap

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    (Reuters) – U.S. stock index futures were little changed on Tuesday as investors waited for producer prices data for cues on inflation in the world’s largest economy and ahead of Federal Reserve Chair Jerome Powell speech later in the day.

    Producer price index (PPI) for final demand is expected to have edged up 0.3% last month, according to economists polled by Reuters, after increasing by an unrevised 0.2% in March.

    The PPI is expected to increase by 2.2% in the 12 months through April, after adding 2.1% in the prior month.

    Sticky inflation and persistent labor market strength have prompted financial markets and most economists to push back expectations for an initial Fed interest rate cut.

    Traders now see a 49.6% chance that the central bank will ease rates by 25 basis points in September, according to the CME FedWatch Tool, from 44% last month. That compared with expectations for first rate cut as early as March at the start of the year.

    Still, stocks have rallied so far this year, with all three major U.S. indexes hovering near fresh record highs, underpinned by better-than-expected first-quarter earnings and hopes that the Fed will cut rates some time this year.

    Focus will be more on Wednesday’s consumer price figures to help assess whether the upside surprises in the first quarter were a blip or a worrying trend.

    Meanwhile, Fed Chair Jerome Powell is due to speak at 1400 GMT.

    At 05:00 a.m. ET, Dow e-minis were up 11 points, or 0.03%, S&P 500 e-minis were up 1 points, or 0.02%, and Nasdaq 100 e-minis were up 7.75 points, or 0.04%.

    The U.S.-listed shares of Alibaba added 0.7% in premarket trading ahead of results.

    Meanwhile, U.S. President Joe Biden unveiled a bundle of steep tariff increases on an array of Chinese imports including electric vehicles, computer chips and medical products.

    U.S.-listed shares of Chinese EV makers Li Auto and Xpeng slid more than 2% each.

    GameStop jumped 39.2%, set to extend its rally after flag bearer Roaring Kitty posted on X.com for the first time in three years.

    Other 2021 meme rally participants and highly shorted stocks such as AMC Entertainment and Koss Corp rose 38.2% and 12.6%, respectively.

    (Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Sriraj Kalluvila)

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  • S&P 500 eyes record high as interest rate cut hopes underpin sentiment

    S&P 500 eyes record high as interest rate cut hopes underpin sentiment

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    U.S. stock index futures were hovering around their highs of the year and just shy of record levels as investors continued to revel in an expected loosening of monetary policy by the Federal Reserve in 2024 amid a ‘soft landing’ for the U.S. economy.

    How are stock-index futures trading

    • S&P 500 futures
      ES00,
      +0.05%
      rose 3 points, or less than 0.1% to 4796

    • Dow Jones Industrial Average futures
      YM00,
      +0.01%
      added 10 points, or less than 0.1% to 37688

    • Nasdaq 100 futures
      NQ00,
      +0.02%
      were unchanged at 16940

    On Monday, the Dow Jones Industrial Average
    DJIA
    rose 1 points, or 0%, to 37306, the S&P 500
    SPX
    increased 21 points, or 0.45%, to 4741, and the Nasdaq Composite
    COMP
    gained 91 points, or 0.62%, to 14905.

    What’s driving markets

    The S&P 500 was set to open Tuesday’s session only about 1% below its record close as traders remained energized by the prospect of the Federal Reserve starting to cut interest rates by the spring of next year.

    Some Fed officials in recent days pushed back against the market’s hopes for lower borrowing costs as early as March, but equity investors seem to have shrugged off those comments, for now.

    Meanwhile, the Bank of Japan on Tuesday reminded traders that an important spigot of cheap money still remains open. The BOJ left its main interest rate at minus 0.1%, and in the accompanying news conference, Governor Kazuo Ueda provided little evidence he was minded to exit the central bank’s ultra-loose monetary policy anytime soon, despite inflation running above its 2% target for 19 consecutive months.

    The Japanese yen
    USDJPY,
    +1.32%
    fell 1.2% and the Nikkei 225 stock index
    JP:NIK
    rose 1.4% as 10-year government bond yields
    BX:TMBMKJP-10Y
    fell 3.6 basis points to 0.634%, the lowest in nearly four months.

    “Whenever central banks take positions that the market thinks are unsustainable, it’s always the currencies that play the role of the canary in the coal mine. No surprise then to see the Yen weakening by around 1% against every major currency overnight as investors vote with their feet,” said Steve Clayton, head of equity funds at Hargreaves Lansdown.

    Traders were also warily eyeing the oil market, after benchmark Brent crude
    BRN00,
    +0.06%
    jumped on Monday following BP’s statement it was halting shipments through the Red Sea, and thus the Suez Canal, because of attack’s by the Houthi in Yemen.

    Many of the world’s biggest shipping companies have said they also will steer clear of the region, prompting concerns about rising costs that may build inflationary pressures.

    “An extended period of disruption in global trade ways should not only sustain energy prices, but also put a renewed pressure on global supply chains and shipping prices,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

    Read: Attacks in the Red Sea add to global shipping woes

    “The latter is a threat to inflation. Remember, the pandemic-related supply chain disruptions were the major reason that sent inflation to almost 10% in the U.S.,” Ozkardeskaya added.

    However, there was little evidence early Tuesday that investors were overly concerned by that narrative, with 10-year U.S. Treasury yields
    BX:TMUBMUSD10Y
    dipping 2.7 basis points to 3.912%.

    U.S. economic updates set for release on Tuesday include November housing starts and building permits at 8:30 a.m. Eastern.

    Atlanta Fed President Raphael Bostic is due to speak at 12:30 p.m.

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  • Wall St futures edge lower as investor await data, policy cues

    Wall St futures edge lower as investor await data, policy cues

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    (Reuters) – U.S. stock index futures slipped on Monday, ahead of a key inflation reading and commentary from Federal Reserve policymakers later in the week, while retailers were in focus as holiday shopping picked up steam with Cyber Monday deals.

    Wall Street ended the Thanksgiving week on a positive note, with the major indexes notching up their fourth consecutive week of gains on growing optimism that the Federal Reserve was likely done hiking interest rates.

    At 5:39 a.m. ET, Dow e-minis were down 48 points, or 0.14%, S&P 500 e-minis were down 7 points, or 0.15%, and Nasdaq 100 e-minis were down 23.75 points, or 0.15%.

    Data showed profit at China’s industrial firms grew at a slower pace, indicating the need for more policy support measures to help shore up growth in the world’s second-largest economy.

    In the US, the investors will look out for the “Beige Book”, the Fed’s compendium of reports about the economy, on Wednesday. The personal consumption expenditure index data for October – the Fed’s preferred inflation gauge – is slated to be released on Thursday.

    While traders have priced in the chances of a pause in rate hikes in December, they see a nearly 50% chance of at least one 25-basis point rate cut in May 2024, according to the CME FedWatch Tool.

    “Usually after Thanksgiving, you tend to get some profit taking because the volumes are low,” said Axel Rudolph, senior market analyst at IG Group.

    “But, until the end of the year we usually have, from a seasonality point of view, quite a bullish bias in equity market.”

    A rebound in equities in November has brought the S&P 500 within 1% from its highest intra-day level this year.

    Retailers were also on the radar after Black Friday and as Cyber Monday kicks off with shoppers expected to purchase up to a record $12 billion.

    Shares of Amazon.com and Walmart edged up 0.3% and 0.1%, respectively, before the bell.

    Among other stocks, Crown Castle International added 3.8% as Elliott Investment Management, a large shareholder in the wireless tower owner planned to push for changes to boost its share price, two sources familiar with the matter told Reuters.

    GE HealthCare lost 2.7% after UBS downgraded the medical devices maker to “sell” from “neutral.

    (Reporting by Shristi Achar A and Shashwat Chauhan in Bengaluru; Editing by Saumyadeb Chakrabarty)

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  • U.S. stock futures slide as sour news on global economy hits sentiment

    U.S. stock futures slide as sour news on global economy hits sentiment

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    U.S. stock index futures slipped early Tuesday as rising bond yields defied dour economic news from China and Europe.

    How are stock-index futures trading

    • S&P 500 futures
      ES00,
      -0.19%
      dipped 20 points, or 0.4%, to 4502

    • Dow Jones Industrial Average futures
      YM00,
      -0.07%
      fell 119 points, or 0.3%, to 34763

    • Nasdaq 100 futures
      NQ00,
      -0.38%
      eased 95 points, or 0.6%, to 15421

    On Friday, the Dow Jones Industrial Average
    DJIA
    rose 116 points, or 0.33%, to 34838, the S&P 500
    SPX
    increased 8 points, or 0.18%, to 4516, and the Nasdaq Composite
    COMP
    dropped 3 points, or 0.02%, to 14032. U.S. markets were closed on Monday for the Labor Day break.

    What’s driving markets

    U.S. traders returned from the Labor Day holiday with global markets in a generally risk-off mood after more disappointing news from the world’s second biggest economy.

    A Caixin survey showed China’s service sector expanded in August at its slowest pace in eight months, providing further evidence that the country’s post-pandemic recovery is faltering.

    Also, a eurozone survey showed output in the bloc contracting at its fastest pace in nearly three years.

    Asian and European bourses mostly turned lower, affecting U.S. equity index futures.

    “Sentiment has turned downbeat again on China as fresh brushstrokes are painted on the picture of its slowing economy,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

    “The data has overshadowed relief that the struggling property giant Country Garden
    2007,
    -0.98%
    has managed to make key interest payments on its debt, reducing, for now, concerns about contagion in the financial sector. China appears to be taking one step forward, but two steps back, as optimism one day turns to pessimism the next,” Streeter added.

    Concerns about economic growth might be expected to support sovereign debt markets, but here too the tone was grim, with Treasury yields rising amid concerns recent increases in oil prices
    CL.1,
    -0.35%
    –though down a bit on Tuesday — may revive inflationary pressures.

    “Oil prices have surged to reach new highs in 2023, a development poised to have significant repercussions on the upcoming August consumer price index reports…[which] presents a fresh challenge for central banks as they continue their diligent efforts to bring inflation levels back in line with their desired targets,” said Stephen Innes, managing partner at SPI Asset Management.

    “This growing concern has notably impacted sovereign bonds, triggering a sell-off primarily driven by heightened inflation expectations. And, of course, stocks do not like the cut of that new inflation jib,” Innes added.

    U.S. economic updates set for release on Tuesday include July factory orders, due at 10 a.m. Eastern.

    Companies in focus

    Blackstone Inc.
    BX,
    -1.77%
    rose 4% in premarket trade, while shares of Airbnb Inc.
    ABNB,
    +0.87%
    were up 5% after S&P Dow Jones Indices announced that both names would gain inclusion in the S&P 500 index. The changes take effect before the start of trading Sept. 18.

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  • U.S. stock futures slip after three-day break

    U.S. stock futures slip after three-day break

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    U.S. stock index futures slipped lower Tuesday after a three-day break, with Chinese equities wilting on disappointment over the monetary stimulus efforts in the world’s number-two economy.

    What’s happening

    • Dow Jones Industrial Average futures
      YM00,
      -0.31%
      fell 109 points, or 0.3%, to 34,495.

    • S&P 500 futures
      ES00,
      -0.26%
      dropped 11 points, or 0.2%, to 4,442.

    • Nasdaq 100 futures
      NQ00,
      -0.16%
      decreased 28 points, or 0.1%, to 15,239.

    On Friday, the Dow Jones Industrial Average
    DJIA,
    -0.32%
    fell 109 points, or 0.32%, to 34299, the S&P 500
    SPX,
    -0.37%
    declined 16 points, or 0.37%, to 4410, and the Nasdaq Composite
    COMP,
    -0.68%
    dropped 93 points, or 0.68%, to 13690.

    What’s driving markets

    Investors were in a cautious mood following the U.S. long weekend in honor of the Juneteenth federal holiday, but that’s after a strong run. The S&P 500 gained 2.6% last week, its fifth week in a row of gains, as the tech-heavy Nasdaq Composite took its winning run to eight weeks.

    Mike Wilson, Morgan Stanley’s chief U.S. equity strategist, said both retail and institutional investor sentiment are at their highest levels in over two years.

    “We note that the consensus is right about 80% of the time, which means such shifts in sentiment and positioning can often be right as the collective intelligence of the market knows best,” he said. “However, given our fundamental view on growth, we find it hard to get on board with the current excitement and narrative supporting it. In other words, if second half growth re-accelerates as expected, then the bullish narrative being used to support equity prices will be proven correct.”

    One event that investors have to weigh is the resumption this fall of student loan payments, and what that may mean for consumers’ disposable income. Student loan payments have been paused since the start of the pandemic in March 2020.

    China cut its 1- and 5-year lending rates by 10 basis points, which investors viewed to be modest, particularly after a Friday state council meeting didn’t result in other concrete measures. According to Societe Generale, there were expectations the 5-year rate, the benchmark for mortgages, would be cut by 15 basis points.

    The Hang Seng
    HSI,
    -1.54%
    fell 1.5% in Hong Kong.

    Alibaba
    BABA,
    -0.11%    ,
    the Chinese internet giant, also was in the spotlight after announcing that its CEO and chairman will step down to focus on the cloud division, with Brooklyn Nets owner Joseph Tsai becoming chairman.

    Tuesday’s economic data include housing starts data, which showed a 21.7% rise in May after a revised 2.9% drop in April. Building permits also climbed 5.2% in May.

    A panel later Tuesday will include both New York Federal Reserve President John Williams and Fed Vice Chair for Supervision Michael Barr. On Wednesday Fed Chair Jerome Powell is due to deliver semi-annual congressional testimony.

    Companies in focus

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  • Dow futures jump more than 300 points as traders start 2023 on a bullish note

    Dow futures jump more than 300 points as traders start 2023 on a bullish note

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    U.S. stock index futures rose Tuesday as investors returned from the festive break in a generally bullish mood.

    How are stock-index futures trading
    • S&P 500 futures
      ES00,
      +0.49%
      advanced 41 points, or 1.1%, to 3902

    • Dow Jones Industrial Average futures
      YM00,
      +0.42%
      gained 332 points, or 1%, to 33617

    • Nasdaq 100 futures
      NQ00,
      +0.67%
      climbed 122 points, or 1.1%, to 11144

    On Friday, the Dow Jones Industrial Average
    DJIA,
    -0.22%
    fell 74 points, or 0.22%, to 33147, the S&P 500
    SPX,
    -0.25%
    declined 10 points, or 0.25%, to 3840, and the Nasdaq Composite
    COMP,
    -0.11%
    dropped 12 points, or 0.11%, to 10466. The Nasdaq Composite fell 33.1% in 2022, the largest one year percentage decline since 2008.

    What’s driving markets

    After Wall Street’s S&P 500 benchmark dropped nearly 20% in 2022, equity investors appeared determined on Tuesday to start the new year of trading on a positive note.

    Activity in index futures was choppy, however, with the S&P 500 contract wobbling in a 55 point range in early-hours action.

    “The calendar year may have changed, but the themes remain the same as the U.S. and U.K. markets reopen for 2023,” said Richard Hunter, head of markets at Interactive Investor.

    “Recessionary concerns will again top the agenda, underpinned by high inflation and rising interest rates. This in turn could point to a troubled January as investors search for positive indications that the tightening policies of the central banks may begin to ease given weakening economic data,” Hunter added.

    Indeed, the International Monetary Fund greeted the new year with a warning that a third of the global economy will suffer recession in 2023, a downturn that will likely trim corporate profits.

    In addition, a burst of fresh strength in the U.S. dollar
    DXY,
    +1.16%
    on Tuesday – a common reaction to global economic slowdown worries – was likely to further crimp earnings of U.S. multinationals.

    Still, Julian Emanuel , strategist at Evercore ISI, reckoned that such concerns don’t necessarily mean stocks can’t rally.

    “Forecasting an earnings recession in 2023 to accompany the economic recession that now seems inevitable, along with a 2023 year end S&P 500 price target of 4,150, would seem impossible,” he said in a note to clients.

    “Yet not only is there a long history of earnings down/stocks up years (1970, 1982 and 1985 stand out, but there is also the tendency for strong stock/bond return years to follow historically forceful tightening cycles (1982, 1985) particularly in years (1995) following ‘havoc being wreaked’ on a 60/40 portfolio such as 2022’s declines.” Emanuel added.


    Source: Evercore ISI

    U.S. economic updates set for release on Tuesday include the December S&P U.S. manufacturing PMI at 9:45 a.m. and the November reading of construction spending at 10 a.m., both times Eastern.

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  • Stocks could face another explosion of volatility Friday as $4 trillion of options expire in ‘quadruple witching’

    Stocks could face another explosion of volatility Friday as $4 trillion of options expire in ‘quadruple witching’

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    Stocks have been on a wild ride this week, and conditions could still get weirder as traders brace for “quadruple witching” on Friday, when a flurry of equity options and futures contracts expire.

    In particular, options contracts tied to $4 trillion in stocks, stock-index futures and exchange-traded funds are set to expire, making Friday potentially the busiest day for options traders this year, according to data compiled by Rocky Fishman, the head of index volatility research at Goldman Sachs.

    The…

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  • U.S. stock futures weaken after best start to a quarter since 1938

    U.S. stock futures weaken after best start to a quarter since 1938

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    U.S. stock index futures dipped on Wednesday as a more cautious tone prevailed following a strong start to the fourth quarter.

    How are stock index-futures trading
    • S&P 500 futures
      ES00,
      -0.80%
      dipped 31 points, or 0.8%, to 3772

    • Dow Jones Industrial Average futures
      YM00,
      -0.80%
      fell 242 points, or 0.8%, to 30123

    • Nasdaq 100 futures
      NQ00,
      -0.82%
      eased 90 points, or 0.8%, to 11550

    On Tuesday, the Dow Jones Industrial Average
    DJIA,
    +2.80%
    rose 825 points, or 2.8%, to 30316, the S&P 500
    SPX,
    +3.06%
    increased 113 points, or 3.06%, to 3791, and the Nasdaq Composite
    COMP,
    +7.79%
    gained 361 points, or 3.34%, to 11176. The Nasdaq Composite was up 5.7% from its 52-week closing low, but it remains down 28.6% for the year to date.

    What’s driving markets

    Wall Street was on course Wednesday for a relatively mild pullback, as stock index futures suffered some selling after a sturdy rally over the past two sessions.

    The S&P 500 has just enjoyed its largest two day percentage gain since April 2020, and the best start to a quarter since 1938, according to Dow Jones Market data.

    The bounce followed three quarters of declines, the worst such run since 2008, during which time the S&P 500 fell 24.8% to a near two-year trough as investors worried that the Federal Reserve’s interest rate hikes to crush inflation would harm the economy.

    However, recent soft U.S data, covering job openings and manufacturing, have encouraged some traders to trim bets on aggressive Fed interest rate rises.

    A week ago markets were forecasting the Fed’s benchmark interest rate would peak at nearly 4.8% by April 2023, but that figure has come down to 4.5%.

    Atlanta Fed President Raphael Bostic will speak at 4 p.m. Eastern.

    Johanna Chua, chief Asia economist at Citi, said that though U.S economic growth remained in better shape than other countries and Fed officials continued to sound hawkish, the market risked being wrongfooted by any signs that interest rates could soon peak.

    “Even as the overall fundamental setup has not changed… trimming of bearish risk/bearish rates/bullish USD positions has driven a sharp reversal,” Chua said.

    This view that oversold conditions and overly bearish sentiment was a key contributor to the latest advance was endorsed by Tom Lee, head of research at Fundstrat, though he accepted that bulls may be chastened by the recent past.

    “Given the generally poor win-ratio for rallies in 2022, investors are naturally viewing the gains over the past two days as just another ‘bear market rally’,” said Lee in a note to clients.

    Still, a number of shifting factors suggest the positive run could continue according to Lee.

    These included the dip in Fed fund futures; a 5% pullback in the dollar index
    DXY,
    +0.73%
    ; and the Vix volatility index
    VIX,
    +1.07%
    moving back below 30 with Vix futures back in contango.

    In addition: “the Nasdaq 100 was ‘100% bid’ Tuesday…since 1996, this has only happened 6 times, and 6 of 6 times the [Nasdaq 100] is higher 6M and 12M later with average gains of 27% and 34%,” said Lee.

    U.S. economic updates set for release on Wednesday include the September ADP employment report at 8:15 a.m.; international trade balance data for August at 8:30 a.m.; the September S&P Global service sector PMI survey at 9:45 a.m.; and the September ISM services report at 10 a.m.

    The ADP report sets up the market for heightened nervousness when the nonfarm payrolls data for September is published at the end of the week.

    “All eyes are on the employment data on Friday, which has priced in tremendous one day volatility in the options market,” said Stephen Innes, managing partner at SPI Asset Management.

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