U.S. equity-index futures rose and most Treasuries advanced as some investors bet a period of disinflation has already begun and the midterm election results will be favorable to markets.
(Bloomberg) — U.S. equity-index futures rose and most Treasuries advanced as some investors bet a period of disinflation has already begun and the midterm election results will be favorable to markets.
Contracts on the S&P 500 and Nasdaq 100 indexes added at least 0.4% each. The 10-year Treasury yield slid for the first time in four days, while the two-year rate rose. The dollar traded lower. Facebook parent Meta Platforms Inc. advanced in New York premarket trading on plans for job cuts.
Monday’s appetite for risk may signal a temporary win for bulls even as sentiment remains fragile ahead of US midterm elections and inflation report. JPMorgan Chase & Co. strategists said a potential peak in bond yields and “very downbeat” sentiment may support stocks. Investors can look forward to positive catalysts from the elections, Morgan Stanley said.
The bout of optimism outweighs, for the moment, the Federal Reserve’s resolute campaign against price surges, signs of stress in US corporate performance and China’s announcement it will “unswervingly” adhere to current Covid Zero policy.
Monday’s partial gains in Treasuries were underpinned by a 4-basis point drop in the 10-year yield. The two-year rate, more sensitive to monetary policy, remained higher around the 4.68% level. Europe’s equity benchmark, the Stoxx 600, rose for a second successive day and traded above its 100-day moving average.
Oil resumed losses as traders fretted that China’s Zero Covid policy will delay an economic recovery and undercut demand.
US data Friday — showing strong hiring and wage increases along with higher unemployment — offered a mixed picture for Fed officials debating how long to extend their campaign to curb elevated inflation.
Meanwhile, Apple Inc. said it expected to produce at least three million fewer iPhone 14 handsets than originally anticipated this year, according to people familiar with its plans. Of the 430 companies in the S&P 500 that have reported quarterly earnings so far, almost a quarter have missed estimates.
Meta rallied 3.6% in early trading after a Wall Street Journal report that the company will fire thousands of workers. Software firm Okta Inc. advanced 3.3% after Guggenheim Securities upgraded the stock.
Markets will watch the latest US inflation reading on Thursday after the core consumer price index rose more than forecast to a 40-year high in September. Even if prices begin to moderate, the CPI is far above the Fed’s comfort zone.
Key events this week:
- Fed officials Susan Collins, Loretta Mester and Tom Barkin speak at events, Monday
- Euro zone retail sales, Tuesday
- US midterm elections, Tuesday
- EIA oil inventory report, Wednesday
- China aggregate financing, PPI, CPI, money supply, new yuan loans, Wednesday
- US wholesale inventories, MBA mortgage applications, Wednesday
- Fed officials John Williams, Tom Barkin speak at events, Wednesday
- US CPI, US initial jobless claims, Thursday
- Fed officials Lorie Logan, Esther George, Loretta Mester speak at events, Thursday
- US University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
- Futures on the S&P 500 rose 0.5% as of 7:28 a.m. New York time
- Futures on the Nasdaq 100 rose 0.4%
- Futures on the Dow Jones Industrial Average rose 0.5%
- The Stoxx Europe 600 rose 0.6%
- The MSCI World index rose 0.5%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro rose 0.1% to $0.9969
- The British pound rose 0.5% to $1.1431
- The Japanese yen was little changed at 146.70 per dollar
Cryptocurrencies
- Bitcoin fell 2% to $20,713.24
- Ether fell 1.6% to $1,577.89
Bonds
- The yield on 10-year Treasuries declined four basis points to 4.12%
- Germany’s 10-year yield declined two basis points to 2.27%
- Britain’s 10-year yield was little changed at 3.53%
Commodities
- West Texas Intermediate crude fell 0.9% to $91.74 a barrel
- Gold futures rose 0.1% to $1,678.30 an ounce
–With assistance from Michael G. Wilson and Tassia Sipahutar.
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