U.S. stock futures have opened slightly higher ahead of a significant week packed with key events, including the Federal Reserve rate decision, the jobs report, and Apple’s earnings report. S&P 500 futures have added 0.3%, Nasdaq-100 futures gained 0.4%, and Dow Jones Industrial Average futures were up 0.1%.
Last week, the S&P 500 fell into correction territory, experiencing a 2.5% decline that brought it down by 10.6% from its 2023 high. Additionally, the benchmark has dropped 4% in October, heading for its third consecutive negative month, which hasn’t happened since 2020 when the COVID-19 pandemic began.
Investors are eagerly anticipating the Federal Reserve decision on Wednesday, with expectations that the central bank will keep its benchmark interest rate unchanged. As rising interest rates have been the main cause of this stock market correction, investors hope that the Fed will indicate that it does not plan to continue raising rates. Traders are anticipating that the Fed will avoid raising rates throughout 2023.
Last week, the 10-year Treasury yield briefly surpassed 5% but ended at 4.84%. Investors are particularly interested in the October jobs report, which will be released on Friday. They are hoping for signs of a slowing labor market, which would make the Fed more comfortable with maintaining its current stance.
Apple, the largest member of the S&P 500, will report its earnings on Thursday after the market closes. The company is currently experiencing a correction, with its stock down 15% from its 52-week high.
The recent sell-off has mainly affected the Nasdaq and tech shares, as investors believe that these sectors will be hit the hardest by rising interest rates. The Nasdaq Composite is currently more than 12% below its 2023 high, firmly in correction territory. The Nasdaq, Dow, and S&P 500 are all heading for their third consecutive negative month. Disappointing earnings from major tech stocks such as Google-parent Alphabet have contributed to the sell-off.
Regarding the recent underperformance of the FANG stocks (Facebook, Amazon, Netflix, and Google-parent Alphabet), Tom Lee, co-founder of Fundstrat Global Advisors, stated on CNBC that he does not believe the FANG thesis is fundamentally broken. He sees the current decline as an opportunity for investors who have not yet entered the FANG stocks to do so.
McDonald’s will kick off the earnings reports with its quarterly update before the market opens on Monday.
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