US stock futures edged higher in premarket trading on Monday as investors braced for another week of potentially stock-moving events: the Nov. 8 midterm elections and October consumer price data.
Futures linked to the S&P 500 (^GSPC) and the Dow Jones Industrial Average (^DJI) were each up about 0.4%. Contracts on the tech-heavy Nasdaq Composite (^IXIC) rose by about the same margin after the index posted its worst weekly loss since January.
A string of somber corporate news has returned focus to the wreck in tech stocks after disappointing earnings last week pushed the sector’s biggest hitters – Apple (AAPL), Amazon.com (AMZN) and Alphabet (GOOGL) – into losses of at least 10-percent had led % last week.
Apple (AAPL) shares tumbled 1.2% ahead of the open after the company said in a statement on Sunday it expects fewer shipments of its latest premium iPhones than previously expected, citing COVID lockdowns in China, disrupting operations at the factory of its largest smartphone maker, Foxconn.
Elsewhere among the tech giants, Facebook parent Meta (META), which is down 73% since the close on Friday and is the worst performer in the S&P 500 index this year, is expected to start large-scale layoffs this week, loudly a Wall Street Journal report on Sunday. Shares are up almost 4% in early trade.
The Facebook logo is seen seen on an iPhone mobile device in this illustrative photo taken in Warsaw, Poland October 12, 2022. (Photo by STR/NurPhoto via Getty Images)
Election Day could keep investors on their toes as dozens of key races determine which political party has control of the Congressional agenda. Wall Street has historically favored a divided Congress or White House, as deadlock makes it difficult to implement potentially unfavorable legislation.
“Since 1929 and excluding the Great Depression, some of the best annual returns for the S&P 500 have come when the incumbent president did not have full control of both sides of Congress,” Megan Horneman, CIO of Verdence Capital Advisors, and Leo Kelly, CEO said in a comment sent by email. “That may be because markets don’t expect major legislative changes with a divided Congress.”
The story goes on
While political campaigns have thrown the spotlight on fiscal leadership, some strategists argue that medium-term outcomes rarely affect financial markets outside of near-term volatility.
“Markets will be influenced more by expected financial conditions and economic catalysts than by midterm elections,” said Dave Sekera, Morningstar’s chief US market strategist, in a recent note. “In the past, some analysis has shown that equity markets have tended to underperform leading up to mid-term and outperform thereafter.”
Traders work on the floor of the NYSE New York Stock Exchange on November 2, 2022 in New York, United States. (Photo by Michael Nagle/Xinhua via Getty Images)
However, October’s Consumer Price Index (CPI) released on Thursday is sure to impact equity markets. Another hot inflation read could bolster expectations that the Federal Reserve will hike interest rates more than originally forecast.
Economists polled by Bloomberg expect headline CPI for the month to come in at 7.9% annually, down from September’s 8.2% year-on-year increase. Core CPI, which excludes the volatile food and energy components of the metric, is expected to come in at 6.5%, little changed from 6.6% last month.
“Headline inflation has probably peaked, but core inflation only peaked last month after the pandemic,” said Ross Mayfield, an analyst at Baird Investment Strategy, in an emailed note. “While the Fed has indicated it sees reasons to slow its pace, the rate of inflation — even if it has peaked — remains far too high to be comfortable.”
“Until the Fed signals that pivot is close, things could remain challenging,” he added.
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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