Monday November 1st

U.S. stock index futures posted a strong gain in early morning trading Monday as investors bet on a year-end rally after markets navigated a typically tough seasonal period successfully. Dow futures rose 139 points. S&P 500 futures gained 0.3% and Nasdaq 100 futures added 0.2%. Shares of Tesla, which became a $1 trillion company last week, continued its gains for the year with shares up more than 1% in premarket trading. Investors have been piling into bets on Tesla options as of late. Shares linked to an economic recovery, such as Ford and Occidental Petroleum, where also indicated higher in premarket trading. “In our view, the key story arc driving equities is the strengthening global recovery,” wrote Fundstrat’s Tom Lee in a note to clients Sunday. “COVID-19 trends are improving, but with vaccinations and boosters, the improvement in healthcare risk could materially accelerate in 2022.” After a tough September where the S&P 500 fell more than 4%, the benchmark jumped nearly 7% last month. September is typically the worst month for the market, averaging a 0.4% decline since 1950, according to the Stock Trader’s Almanac. The market typically averages a gain in October, but the month is known for notable crashes so investors were a bit wary as the month began. But stocks ended up closing out October on Friday with all three major averages closing at record highs. The S&P 500 and Nasdaq clinched their best months since November 2020. The Dow Jones Industrial Average rose 5.8% in October. The S&P 500 rallied 6.9% last month and the technology-focused Nasdaq Composite added 7.3% in October. For the year, the S&P 500 is up more than 22%. Corporate earnings season dominated October amid solid profit results even with global supply chain concerns. About half of the S&P 500 companies have reported quarterly results and more than 80% of them beat earnings estimates from Wall Street analysts, according to Refinitiv. Market participants are gearing up for another week of corporate earnings, a key Federal Reserve meeting on Wednesday and October’s jobs report. As earnings season continues this week, investors will also be monitoring the Federal Reserve’s two-day meeting Tuesday and Wednesday. The central bank is widely expected to announce that it will begin to unwind its $120 billion in monthly bond purchases and end the program entirely by the middle of next year. Investors will also be looking for the Fed’s comments on rising prices as inflation has been running at a 30-year high. “The Fed is part of a global move to remove accommodation, and the market drives right past that,” Bleakley Advisory Group CIO Peter Boockvar said. “In a way, the stock market is playing a game of chicken, with this inflation move and interest rates and the response from central banks.” Investors will get a look at the Institute for Supply Management’s manufacturing index for October, which is expected to fall to 60.3 from September’s 61.1. Any number above 50 is considered expansion. The other big event for the week will be October’s employment report Friday, which could show some improvement in hiring, as new cases of Covid-19 continued to decline. Economists surveyed by Dow Jones expect nonfarm payrolls to show an increase of 450,000 after September’s meager 194,000 gain, with the unemployment rate edging down to 4.7%. “Key to the report will be how much wage inflation rises and whether the labor force participation rate finally picks up after so many recently came of extended unemployment benefits,” said Jim Paulsen, chief investment strategist for Leuthold Group. Shares in Asia-Pacific were mixed on Monday as investors reacted to economic data that showed a mixed picture of Chinese manufacturing activity in October. Japanese stocks led gains regionally as the Nikkei 225 jumped 2.61% to close at 29,647.08. The Topix index climbed 2.18% on the day to 2,044.72. Those gains came after the country’s ruling Liberal Democratic Party held on to its single-party majority in a Sunday parliamentary election. Hong Kong’s Hang Seng index closed 0.88% lower at 25,154.32 while mainland Chinese stocks were mixed on the day, with the Shanghai composite fractionally lower at 3,544.48 and the Shenzhen component climbing 0.174% to 14,476.53. The Hang Seng Tech index declined 1.51%. Elsewhere, South Korea’s Kospi advanced 0.28% to close at 2,978.94. Oil prices rose on Monday as expectations of strong demand and a belief that a key producer group will not turn on the spigots too fast helped reverse initial losses caused by the release of fuel reserves by China, the world’s biggest energy consumer. Brent crude futures rose 69 cents, or 0.8%, to $84.42 a barrel, after hitting a session low of $83.03. U.S. West Texas Intermediate (WTI) crude futures gained 42 cents, or 0.5%, to $83.99, having fallen to $82.74 earlier. Gold prices were hemmed into a range on Monday, ahead of a key Federal Reserve meeting this week where the focus is on the central bank’s plan for tapering its pandemic stimulus measures. Spot gold was up 0.2% to $1,786.60 per ounce at 1011 GMT, after touching a more than one-week low on Friday. U.S. gold futures for December delivery rose 0.3% to $1,789.20 per ounce.