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Headlines
- S&P 500 and Nasdaq futures show slight declines following disappointing FedEx earnings, which impacted interest rate optimism.
- Despite FedEx's struggles, major tech stocks and Darden Restaurants performed well, with significant gains observed.
- Economic indicators suggest a mixed outlook, with strong manufacturing data contrasted by declining existing home sales.
September S&P 500 E-Mini futures are down 0.17%, while September Nasdaq 100 E-Mini futures have decreased by 0.35% this morning. Disappointing earnings from FedEx have tempered the positive sentiment surrounding interest rates, as investors prepare for the upcoming triple-witching event.
FedEx (NYSE:FDX) has experienced a significant pre-market decline of over 13% following weaker-than-expected Q1 adjusted EPS and a downward revision of its full-year guidance. In the previous trading session, Wall Street’s major indexes finished higher, with the benchmark S&P 500 and Dow achieving new all-time highs, while the tech-heavy Nasdaq 100 reached a two-month peak. Darden Restaurants saw over an 8% surge, becoming the top gainer on the S&P 500 due to a delivery partnership announcement with Uber, overshadowing its weaker-than-expected Q1 results. Additionally, major tech stocks rallied, with Tesla climbing more than 7% and Apple advancing over 3%. Chip stocks also performed well, with Advanced Micro Devices and Applied Materials both rising more than 5%. Conversely, Steelcase faced a decline of over 5% after reporting weaker-than-expected Q2 revenue and issuing below-consensus guidance for Q3.
Despite some fluctuations following the Fed’s rate cut, the S&P 500’s upward trend appears solid. The Fed’s decision to implement a 50-basis point rate cut was met with approval from market participants, viewed as a necessary measure to address economic concerns without triggering alarm reminiscent of past financial crises.
Recent economic data released on Thursday revealed that the U.S. Philadelphia Fed manufacturing index rose to 1.7 in September, surpassing expectations of -0.8. Additionally, the number of initial jobless claims decreased by 12,000 to a four-month low of 219,000, better than the expected 230,000. However, the U.S. leading indicator index fell by 0.2% month-over-month in August, a smaller drop than anticipated. Existing home sales also dipped by 2.5% month-over-month, reaching a ten-month low of 3.86 million in August, below the forecast of 3.92 million.
U.S. rate futures indicate a 59.1% likelihood of a 25 basis point rate cut and a 40.9% chance of a 50 basis point cut at the next central bank meeting in November.
Meanwhile, Wall Street is gearing up for the quarterly triple-witching event, where derivatives contracts linked to equities, index options, and futures expire. This event prompts traders to either roll over existing positions or initiate new ones, with approximately $5.1 trillion worth of options tied to individual stocks, indexes, and ETFs set to expire today, according to Asym 500.
