Election Uncertainty May Lead To Choppy Trading On Wall Street

The major U.S. index futures are currently pointing to a roughly flat open on Monday, with stocks likely to show a lack of direction in early trading.

Traders may be reluctant to make significant moves ahead of the U.S. elections on Tuesday, as Vice President Kamala Harris faces off against former President Donald Trump.

With polls showing an extremely tight race between Harris and Trump, the outcome of the presidential election may not be known on Election Day.

The results of House and Senate races are also likely to be in focus, as the makeup of Congress could affect how much the next president can accomplish.

Traders are also looking ahead to the Federal Reserve’s monetary policy decision, which is due to be announced on Thursday.

The Fed is widely expected to lower interest rates by another 25 basis points, but traders will be looking to the accompanying statement for clues about the likelihood of future rate cuts.

Following the sell-off seen during Thursday’s session, stocks showed a strong move back to the upside in early trading on Friday. The major averages gave back some ground over the course of the trading day but remained firmly in positive territory.

The tech-heavy Nasdaq led the way higher, advancing 144.77 points or 0.8 percent to 18,239.92 after moving sharply lower over two previous sessions. The Dow also climbed 288.73 points or 0.7 percent to 42,052.19, bouncing off its lowest closing level in over a month, while the S&P 500 rose 23.35 points or 0.4 percent to 5,728.80.

Despite the rebound on the day, the major averages all moved to the downside for the week. The Dow dipped by 0.2 percent, while the S&P 500 and the Nasdaq slumped by 1.4 percent and 1.5 percent, respectively.

The rebound on Wall Street partly reflected a positive reaction to upbeat earnings news from big-name companies like Intel (INTC) and Amazon (AMZN).

Semiconductor giant Intel soared by 7.8 percent after reporting better than expected third quarter results and providing strong guidance.

Shares of Amazon also spiked by 6.2 percent after the online retail giant reported third quarter results that exceeded analyst estimates on both the top and bottom lines.

On the other hand, shares of Apple (AAPL) moved to the downside even though the tech giant reported better than expected fiscal fourth quarter results.

Traders were also digesting the Labor Department’s closely watched report, which showed much weaker than expected job growth in the month of October.

The Labor Department said non-farm payroll employment crept up by 12,000 jobs in October after jumping by a downwardly revised 223,000 jobs in September.

Economists had expected employment to climb by 113,000 jobs compared to the surge of 254,000 jobs originally reported for the previous month.

Meanwhile, the report said the unemployment rate came in at 4.1 percent in October, unchanged from September and in line with economist estimates.

While the data raised some concerns about the strength of the economy, the report also led to renewed optimism about the outlook for interest rates.

However, due the impact of Hurricanes Helene and Milton and the Boeing (BA) strike, the report may not affect the Federal Reserve’s plan to gradually lower rates.

Retail stocks moved sharply higher on the heels of the upbeat results from Amazon, driving the Dow Jones U.S. Retail Index up by 2.6 percent to a record closing high.

Considerable strength was also visible among biotechnology stocks, as reflected by the 2.2 percent jump by the NYSE Arca Biotechnology Index.

Airline, networking and computer hardware stocks also saw significant strength, while notable weakness emerged among utilities and natural gas stocks.

Commodity, Currency Markets

Crude oil futures are surging $1.87 to $71.36 a barrel after rising $0.23 to $69.49 a barrel last Friday. Meanwhile, after edged down $0.10 to$2,749.20 an ounce in the previous session, gold futures are inching up $0.40 to $2,749.60 an ounce.

On the currency front, the U.S. dollar is trading at 152.01 yen versus the 153.01 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.0896 compared to last Friday’s $1.0834.

Asia

Asian stocks rose in thin trade on Monday, with Japanese markets closed for the Culture Day holiday. Regional gains were impressive despite persisting Middle East tensions and anxiety ahead of this week’s U.S. presidential election and the Federal Reserve’s interest rate decision.

The dollar slipped as weaker than expected U.S. jobs data pointed to a cooling labor market. Gold edged up as Iran and Azerbaijan began two days of joint naval exercises in the Caspian Sea.

Iran’s Supreme Leader Ayatollah Ali Khamenei has vowed that Israel and the U.S. would face a “teeth-breaking response” for their actions against the country.

The Wall Street Journal reported that Iran is planning a complex attack on Israel, which may include missiles with high-powered warheads.

Both WTI and Brent crude contracts jumped around 2 percent in Asian trading after OPEC+ agreed to push back its December production increase by one month.

China’s Shanghai Composite Index rallied 1.2 percent to 3,310.21 as investors looked ahead to a meeting of China’s National People’s Congress that is expected to unveil a new fiscal stimulus package focused on stabilizing the economy through local government debt swaps and injections of capital into banks.

Hong Kong’s Hang Seng Index rose 0.3 percent to 20,567.52 on hopes for fresh policy measures from Beijing to boost consumer consumption.

Seoul stocks logged strong gains after the country’s opposition Democratic Party leader agreed to support the government’s move to scrap a scheme to tax profits on stock investments. The Kospi jumped 1.8 percent to close at 2,588.97.

Chipmaker Samsung Electronics rose 0.7 percent, while peer SK Hynix surged 6.5 percent and battery maker LG Energy Solution climbed 3.3 percent.

Australian markets advanced, led by banks and healthcare stocks ahead of the Reserve Bank of Australia’s upcoming policy meeting.

The benchmark S&P/ASX 200 Index rose 0.6 percent to 8,164.60, while the broader All Ordinaries Index settled 0.5 percent higher at 8,422.80.

Westpac gained 0.9 percent as the banking major increased its share buyback program by an additional A$1 billion.

Mineral Resources plummeted 9.6 percent on news that managing director Chris Ellison will step down after the board found he used the company’s resources for his personal benefits.

Across the Tasman Sea, New Zealand’s benchmark S&P/NZX-50 Index edged up by 0.3 percent to 12,590.60.

Europe

European stocks have struggled for direction on Monday due to investor anxiety ahead of this week’s U.S. presidential election and the Federal Reserve’s interest rate decision.

With just 1 day until the U.S. elections, over 75 million early votes have already been cast, according to University of Florida estimates.

Voters will also determine whether the next president enters office with a friendly Congress or a hostile one.

If control of the U.S. House of Representatives and Senate is divided, it would likely mean a maintaining of the status quo.

The U.S. Federal Reserve will announce its interest rate decision on Thursday, followed by Fed. Chair Jerome Powell’s press conference.

Markets expect the U.S. central bank to cut interest rates by 25 basis points amid economic contradictions, following a supersize 50 basis point move in September.

In addition, the Bank of England is expected to cut interest rates by 25 basis points when it meets on Thursday.

While the U.K.’s FTSE 100 Index is up by 0.5 percent, the French CAC 40 Index and the German DAX Index are both down by 0.1 percent.

Construction firm Skanska AB has climbed after it signed a contract to build a pair of office blocks in South Molton Street in London’s West End.

Energy giant BP Plc and peer Shell have also moved higher as oil prices rose more than $1 on a decision by OPEC+ to delay by a month plans to increase output.

Burberry has also surged following reports that Italy’s Moncler could be considering making a bid for the luxury firm.

Meanwhile, chipmaker STMicroelectronics has declined after Morgan Stanley downgraded its rating on the stock to “underweight” from “equal weight”.

Schneider Electric has also fallen after the French industrials giant ousted CEO Peter Herweck with immediate effect, citing issues with his execution of the company’s strategy.

U.S. Economic News

The Commerce Department is due to release its report on new orders for manufactured goods in the month of September at 10 am ET. Factory orders are expected to decrease by 0.5 percent in September after dipping by 0.2 percent in August.

At 1 pm ET, the Treasury Department is scheduled to announce the results of this month’s auction of $58 billion worth of three-year notes.

Stocks In Focus

Shares of Nvidia (NVDA) are seeing notable pre-market strength on news the AI darling will replace Intel (INTC) in the Dow Jones Industrial Average prior to the start of trading on Friday.

Paint maker Sherwin-Williams (SHW) is also surging by 4.8 percent in pre-market trading following news it will replace Dow Inc. (DOW) in the Dow Jones Industrial Average.

S&P Dow Jones Indices said the changes were initiated to ensure a more representative exposure to the semiconductors industry and the materials sector, respectively.

On the other hand, shares of Intel and Dow are likely to move to the downside on the news of their replacement in the blue chip index.