Nasdaq, S&P 500 Futures Diverge As Spotlight Shifts To JOLTS Data, Nike Earnings –

Stocks are gearing up for another nervy start on Tuesday after they scrapped through in the previous session to finish a seasonally weak September on a high. Some strategists point to the unusual September gains as a testament to the market’s resilience. The unequivocal belief is the gains could continue into the fourth quarter and beyond only if the economy can skirt a recession.

Each incoming economic data, including the job opening and manufacturing activity data due Tuesday, would offer evidence regarding the economy’s strength or lack thereof. This being the presidential election year, traders brace for more volatility at least until Nov. 5. The market may also have to contend with earnings as they begin to roll out in the second half of the month.

In premarket trading on Tuesday, the SPDR S&P 500 ETF Trust SPY eased 0.02% to $573.63 and the Invesco QQQ ETF QQQ rose 0.09% to $488.50, according to Benzinga Pro data.

Cues From Last Week:

U.S. stocks survived a bout of selling pressure and closed Monday’s session higher. The overbought levels and a slump in some major global markets introduced caution right at the start of the session, and the major indices moved mostly below the unchanged line for much of the session. The selling intensified after Fed Chair Jerome Powell poured cold water on hopes of rapid downward adjustment of rates during his speech.

The major indices staged a late-hour recovery to end September firmly in the green, with the S&P 500 and Dow Industrials closing at fresh highs. Nine of the 11 S&P 500 sector classes closed in the green, with communication services, energy and real estate stocks seeing strong buying interest. On the other hand, material and consumer discretionary stocks pulled back.

Insights From Analysts:

Fed’s larger-than-expected rate cut can buy more time for high-quality stocks to remain expensive and even help lower-quality cyclical stocks, especially after recent China actions, said Morgan Stanley’s US Equity Strategist Mike Wilson. “However, I believe labor data and other growth indicators need to improve to justify these conditions continuing into year-end and beyond – i.e., a soft landing with growth reaccelerating, inflation stabilizing above 2%, and the Fed continuing to cut rates, ” the strategist said.

The market is entering a seasonally strong period after being up for eight of the nine months. Fund Strat’s Head of Research Tom Lee said in the firm’s weekly commentary that the following three favorable structural drivers for equities support “buy the dip:”

• Fed launches easing cycle + “no landing”
• China PBOC bazooka
• Post-election and cash on sidelines dynamics

He noted that when the Fed cuts rate and the US economy is not in recession, the S&P 500 Index has risen seven out of seven times both three and six months later.

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Upcoming Economic Data:

• S&P Global is due to release the final manufacturing purchasing managers’ index for September at 9:45 a.m. EDT. Economists, on average, expect the final manufacturing PMI to come in at 47, down from 47.9 in August.
• The Institute for Supply Management will release its national manufacturing PMI at 10 a.m. EDT, with the consensus calling for a reading of 47.5 for September, slightly up from 47.2 in August.
• The Labor Department is scheduled to release the results of its August Job Openings and Labor Turnover Survey at 10 a.m. EDT. Economists, on average, estimate job openings to remain unchanged with the July level, at 7.7 million.
• The Commerce Department’s construction spending report for August, due at 10 a.m. EDT, will likely show flattish spending relative to July, which saw a 0.3% month-over-month drop.
• Federal Reserve Governor Lisa Cook will make a public appearance at 11:10 a.m. EDT.
• Richmond Fed President Tom Barkin, Atlanta Fed President Raphael Bostic and Boston Fed President Susan Collins are scheduled to participate in a joint panel discussion about technology-enabled disruption at 6:15 p.m. EDT.

Stocks In Focus:

• Trump Media & Technology Group Corp. DJT rallied nearly 7.50% in premarket trading after the company said it has expanded its TV streaming delivery network to multi-site operation.
• Ford Motor Co. F climbed over 2% on a positive analyst action.
• Acuity Brands, Inc. AYI, McCormick & Company, Inc. MKC, Paychex, Inc. PAYX and United Natural Foods, Inc. UNFI are among the notable companies due to report their quarterly results before the market open.
• Those reporting after the close are NIKE, Inc. NKE, Resources Connection, Inc. RGP and Cal-Maine Foods, Inc. CALM.

Commodities, Bonds And Global Equity Markets:

Crude oil futures pulled back sharply, while gold futures advanced moderately. Bitcoin BTC/USD traded slightly higher under the $64K level. The yield on the 10-year benchmark Treasury note fell 5.7 basis points to 3.745%.

In Asia, the Japanese market rebounded, although sentiment elsewhere remained muted. The Chinese, Hong Kong and South Korean markets remained closed for public holidays. European stocks showed tentativeness in early trading ad traders digested the preliminary September consumer price inflation data for the eurozone.

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