“Tech giants fuel record-breaking rally in the stock market today, as investors eagerly await the Federal Reserve’s decision on interest rates.”
Stock futures were mostly higher Tuesday, the last day of the month, as Wall Street tried to maintain momentum from the previous session. Dow Jones Industrial Average futures gained 73 points, or 0.2%. S&P 500 futures advanced 0.2%, and Nasdaq 100 futures were up 0.1%.
The earnings season continued Tuesday, with Caterpillar posting its latest quarterly figures. The company’s earnings for the third quarter exceeded estimates. However, Caterpillar said in its earnings presentation that fourth-quarter revenue would only be “slightly” higher than the same quarter a year before, worrying investors it could miss analysts’ expectations. Shares were down 4%.
During Monday’s trading session, the S&P 500 climbed out of correction territory and posted its best day since late August. The Nasdaq Composite added about 1.2%, while the Dow jumped roughly 1.6% in its best day since early June.
“I don’t quite trust [Monday’s rally] because I do think some of the fundamentals are starting to change,” Anastasia Amoroso, iCapital’s chief investment strategist, said on CNBC’s “Closing Bell: Overtime” on Monday. However, “coming into this week, we did hit some oversold levels,” she added. Corporate buybacks are likely to return as earnings season rolls on, Amoroso added, which could further justify a case for a bounce back.
The major averages remain on pace to end the month in the red. The Dow and the S&P 500 are down 1.7% and 2.8% in October, respectively, in their third consecutive negative month. This marks the first three-month losing streak for both indexes since March 2020. The tech-heavy Nasdaq has declined more than 3% month to date, also on pace for its third negative month in a row.
Wall Street is also keeping a close eye on the Fed’s next decision on interest rates this Wednesday. Fed funds futures pricing suggests a roughly 98% probability that the central bank will keep rates at current levels, according to the CME FedWatch Tool.
“I actually expect that that might be a bullish development, because Fed Chair Powell sort of alluded to the case that the fact that Treasury yields rose across the curve means they might be done tightening,” said Amoroso.
Investors are also hoping that October’s payrolls report, which will be released Friday, will indicate some slowdown in the labor market.
