U.S. Stock Futures Show Positive Start to New Quarter

Traders are beginning the new quarter on a more positive note as U.S. stock futures experience a rise.

How are stock-index futures trading?

• S&P 500 futures (ES00) rose 23 points, or 0.5%, reaching 4349.
• Dow Jones Industrial Average futures (YM00) climbed 158 points, or 0.5%, reaching 33883.
• Nasdaq 100 futures (NQ00) added 114 points, or 0.8%, reaching 14980.

On Friday, the Dow Jones Industrial Average fell 159 points, or 0.47%, to 33508, the S&P 500 declined 12 points, or 0.27%, to 4288, and the Nasdaq Composite gained 18 points, or 0.14%, to 13219.

Investors are taking on a more risk-on stance as we enter the final quarter of 2023. This seasonal period typically sees gains for stocks, especially towards the end of the year.

Market Outlook

“Welcome to Q4 with the markets relieved to see the end of September, and for that matter Q3, after a tough latter half to a quarter that promised a lot after a buoyant July,” emphasized Jim Reid, strategist at Deutsche Bank.

The advance for S&P 500 futures on Monday follows a challenging month for the equity benchmark, which experienced a decline of 4.9%. This slump was attributed to concerns over sticky inflationary pressures that led to a surge in 10-year Treasury yields, reaching their highest level since 2007. Investors fear that this will prompt the Federal Reserve to keep interest rates higher for an extended period.

As the new week begins, Treasury yields remain elevated, with traders keeping an eye on important jobs data set to be released on Friday.

However, the sentiment in the stock market may have been bolstered by the unexpected news that the U.S. government managed to avoid a shutdown on Sunday.

“Early indications are that U.S. markets could open the new quarter in more positive territory, as U.S. legislators were able to enforce a temporary measure to avoid shutdown over the weekend,” said Richard Hunter, head of markets at Interactive Investor.

Stock Market Updates and Economic News

The recent announcement regarding a crucial decision has provided some temporary relief, with prospects of short-term benefits, according to leading experts in the industry.

China, on the other hand, had positive news as official data revealed their manufacturing sector experienced growth in September after a six-month decline. This positive sentiment had a domino effect on global markets, although China itself was closed for the Golden Week holiday.

Amidst these developments, Tom Lee, head of research at Fundstrat, expressed his optimism towards stocks, citing a stable U.S. consumer base and a healthy economy. Lee believes that these factors will contribute to the rise in corporate profits in the coming months.

Lee further emphasized his positive outlook stating, "We remain comfortable with the view that equities can rally into the end of 2023. Although there has been significant technical damage over the past 8 weeks, and this breakdown won't be instantly reversed as we enter October, the price level of the S&P 500 is approaching an area of attractive risk/reward."

Upcoming updates on the U.S. economy scheduled for release on Monday include the final manufacturing PMI for September from the S&P, set to be announced at 9:45 a.m. Eastern. This will be followed by the ISM manufacturing survey for September at 10 a.m. and August construction spending.

Furthermore, several Federal Reserve officials are expected to make speeches early in the week. Chair Jay Powell and Philadelphia Fed President Patrick Harker will make comments at a community event in York, PA at 11 a.m. Additionally, New York Fed President John Williams is scheduled to speak at an environmental economics conference at 11:30 a.m., and President of the Cleveland Fed Loretta Mester will address an audience at the 50 Club of Cleveland at 7:30 p.m.