Good morning traders!
The S&P 500 ($SPY) is trading below Friday’s close. Let’s get into it…
Stock futures experienced difficulty advancing this morning due to the Federal Reserve’s sustained high-interest rate strategy and the looming possibility of a US government shutdown. Futures on the S&P 500 and the Dow Jones Industrial Average were relatively stagnant, losing earlier gains as 10-year Treasury yields experienced a jump. This stagnation and decline in the market are also attributed to the rising tension and uncertainty surrounding the potential government shutdown, with little progress seen on a budget agreement by lawmakers.
The continuation of the rally in oil prices has reignited debates about the prospect of enduring high inflation and whether this would constrain the Federal Reserve from reducing rates in the near term. Investors are keenly awaiting the fresh read on PCE inflation due this Friday to gain more insight into the economic trajectory. The anticipation and speculation surrounding the inflation rates are causing investors to be cautious and are contributing to the struggles seen in the stock market.
In addition to the economic pressures from potential government shutdown and inflation, the market is also reacting to developments in various industries. A tentative deal to end the Hollywood writers’ strike on Sunday has resulted in a boost for media stocks, with Warner Bros. Discovery shares experiencing a 4% increase in premarket trading. This deal has brought some optimism to the media sector, reflecting the market’s sensitivity to industry-specific developments.
However, there is less optimism in the automotive sector, particularly around the autoworkers’ strike. Despite some progress, Ford mentioned significant gaps that need to be closed before reaching a new labor agreement with the UAW. The uncertainty and ongoing negotiations in the automotive industry contrast with the positive developments in the media sector, illustrating the diverse range of factors influencing stocks.
Monday Economic Events:
Chicago Fed National Index 8:30am ET
Dallas Fed Mfg Survey 10:30am ET
Fed Speaker Scheduled:
Austan Goolsbee 8:30am ET
Neel Kashkari 6:00pm ET
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