Wall Street Set To Start New Week Sharply Lower As Traders Brace For Key Economic Data And Fed Minutes: Why Strategist Sees Market Consolidating In Near Term

U.S. stock futures are headed lower on Monday after the jobs data-induced strength seen in the final session of last week. The mood has been rendered cautious as traders await a few key first-tier economic data and the minutes of the Federal Reserve’s September rate-setting meeting.

The imminent third-quarter reporting season could force traders to stay on the sidelines as corporate profit growth has been a major driving factor for the market amid economic uncertainties. JP Morgan Chase & Co. (NYSE:JPM) kickstarts the big bank reporting season this Friday.

The Middle East tensions that have sent oil on the boil could also be a spot a bother for traders even as they look ahead to soft-landing, facilitated by the Fed’s rate cuts.

Futures	Performance (+/-)
Nasdaq 100	-0.66%
S&P 500	-0.53%
Dow	-0.44%
R2K	-0.74%

In premarket trading on Monday, the SPDR S&P 500 ETF Trust (NYSE:SPY) slipped 0.57% to $569.72 and the Invesco QQQ ETF (NASDAQ:QQQ) moved 0.69% lower to $483.97, according to Benzinga Pro data.

Cues From Last Week:

U.S. stocks kept the winning streak going, as the major indices rose for a fourth straight week but the gains were much more modest and came amid volatility. The 30-stock Dow Jones Industrial Average finished at a fresh record. Small-cap stocks, however, posted a moderate decline for the week.

Stocks started the week higher amid caution but pulled back on Tuesday, dragged by geopolitical tensions, worries concerning the dockworkers’ strike and weak manufacturing data. The major averages reversed course on Wednesday, despite ongoing headwinds, but retreated on Thursday as traders processed a mixed set of economic data and remained cautious amid Middle East tensions and the port strike.

Stronger-than-expected non-farm payroll gains, although generating some sell-off in early trading, lifted the averages higher thereafter, helping them to recoup all their losses for the week.

Index	Performance (+/)	Value
Nasdaq Composite	+0.10%	18,137.85
S&P 500 Index	+0.23%	5,751.07
Dow Industrials	+0.09%	42,352.75
Russell 2000	-0.54%	2,212.80

Insights From Analysts:

The market could be stuck in the recent trading range until the November election, said Ivan Martchev, investment strategist at Navellier & Associates. The strategist said the same type of trading seen in July, when marginal new highs were met with selling into strength, most notably in the tech sector, is repeating now. There has been rotation into value stocks but the pace of this rotation has been slow in the recent week, he said.

The strategist blamed the situation in the Middle East for the profit-taking. That said, a large downside is unlikely, he said.

“But it does suggest one shouldn't look for the market to run higher or make anything more than marginal new highs before the election in early November,” Martchev said.

“We could be in for a continuation of the trading range that started in the middle of July.”

Carson Group Chief Investment Strategist Ryan Detrick also raised a red flag. The S&P 500 Index rose 34.4% year-over-year in September this year, and six times in the past, the index had gained over 30% in September versus the year ago, the strategist said. Only once out of the six times, did the index post gains for October and the average return for the fourth quarter was also below-average, he added.

The S&P 500 is up nearly 35% YoY the past 12 months.

This is one of the best 12 month rallies ever going into Q4.

Worth noting October higher only once out of six times it was up 30% or more going into Q4 and Q4 below avg returns as well. pic.twitter.com/hfwwND2Dw5

— Ryan Detrick, CMT (@RyanDetrick) October 5, 2024

See also: Best Futures Trading Software

Upcoming Economic Data:

The September producer and consumer price inflation reports as well as the weekly jobless claims data and the preliminary October consumer sentiment survey from the University of Michigan, all due in the back half of the week, are among the market-moving data for the week. Traders may also evince interest in sifting through the minutes of the September Federal Open Market Committee meeting due on Wednesday. At the meeting, the central bank began its policy pivot and reduced the Fed funds rate by an aggressive 50 basis points.

A slew of Fed speeches strewn through the week could also create ripples in the market.

• On Monday at 11:30 a.m. EDT, the Treasury will auction three- and six-month bills.





• Fed Governor Michelle Bowman is scheduled to speak at 1 p.m. EDT.





• Minneapolis Fed President Neel Kashkari will participate in a Q&A session at 1:50 p.m. EDT.





• Atlanta Fed President Raphael Bostic will moderate a conversation with Steve Koonin, CEO of the Atlanta Hawks and State Farm Arena, as part of the Atlanta Fed’s Leading Voice series at 6 p.m. EDT.





• The Fed will release its consumer credit report for August at 3 p.m. EDT. Economists, on average, expect the outstanding consumer credit to increase at a slower rate of $12 billion for the month compared to a $25.5 billion jump in August.





• St. Louis Fed President Alberto Musalem will make a public appearance at 6:30 p.m. EDT.

Stocks In Focus:

• Pfizer Inc. (NYSE:PFE) shares climbed over 2.50% in premarket trading after Wall Street Journal said activist investor Starboard Value has invested approximately $1 billion in the company and has engaged a few former Pfizer executives to assist in revitalizing its sagging fortunes.





• Spirit AeroSystems Holdings, Inc. (NYSE:SPR) shares plunged over 8.5% after reports said the company may have to lay off workers in three weeks amid the ongoing Boeing Co. (NYSE:BA) stock continues.





• Nvidia Corp. (NASDAQ:NVDA) fell over 1% and Tesla, Inc. (NASDAQ:TSLA) was down modestly ahead of Thursday’s Robotaxi event.

Commodities, Bonds And Global Equity Markets:

Crude oil futures rose over 2%, and in the early New York session it topped the $76-a-barrel mark. Gold futures rose modestly but traded shy of its record high. Bitcoin (CRYPTO: BTC) rose over 1% in the past 24 hours and traded above $63K.

The 10-year Treasury note yield topped 4% by virtue of its 2.1-basis-point climb.

The Asian markets reacted to the strong U.S. jobs data and ended mostly higher, led by Japan’s Nikkei 225 average, which climbed 1.8%. On the other hand, the Indian and New Zealand markets retreated.

The Chinese market will reopen on Tuesday after the weeklong National Day holiday. Traders across the global market look ahead to the re-opening, especially after a notice from the State Council said on Sunday that a panel of senior officials from the National Development and Reform Commission, including chairman Zheng Shanjie, will brief reporters on the implementation of stimulus policies at the press conference on Tuesday at 10 a.m. local time (Monday, 10 p.m. EDT).

European stocks traded mostly lower early hours of Monday.

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