S&P 500 and Nasdaq 100: Market Holds Steady as U.S. Election and Fed Decision Loom

Stock Futures Flat Ahead of U.S. Election and Fed Rate Decision

Stock futures were largely unchanged Monday as investors braced for a busy week featuring the U.S. presidential election and a Federal Reserve rate decision. S&P 500 futures rose slightly, Nasdaq-100 futures dipped by less than 0.1%, and Dow Jones futures slipped 36 points, or 0.1%, as traders weighed potential market impacts.

U.S. Election Results Could Shape Year-End Trading

Tuesday’s U.S. election has created uncertainty in markets, with recent NBC polling showing a tight race between former President Donald Trump and Vice President Kamala Harris. Beyond the presidential results, investors are closely monitoring congressional outcomes. A divided Congress would likely support policy stability, while a single-party control could enable fiscal reforms like new spending or tax changes, which would impact market sentiment and economic projections heading into the end of the year.

Fed Rate Decision Adds to Investor Uncertainty

The Federal Reserve’s upcoming rate decision is also in focus, with markets forecasting a 96% chance of a rate cut based on CME Group’s FedWatch tool. This would follow September’s 50-basis-point cut. Fed Chair Jerome Powell’s statements post-meeting will be pivotal, as investors look for clues on the Fed’s direction into 2024. If Powell signals additional easing or a rate-hold policy, markets may respond with optimism; a more reserved stance could lead to caution.

Earnings Season Continues, Providing Market Resilience

About 20% of the S&P 500 companies will report earnings this week, including major names such as Super Micro Computer, Moderna, CVS Health, and Qualcomm. Thus far, 70% of companies have beaten expectations, according to FactSet, highlighting corporate strength amid a complex economic environment. Strong earnings, however, may not be enough to counteract broader political and fiscal concerns.

Notable Pre-Market Movers: Nvidia, Talen Energy, Peloton

Nvidia shares rose 2% after news it will replace Intel in the Dow Jones Industrial Average on November 8, reflecting its success in the AI space as Intel lags. Talen Energy dropped 8% following a federal decision denying power dispatch increases to Amazon’s data center, with related stocks Constellation and Vistra down in sympathy.

Peloton gained 8% on a Bank of America upgrade citing growth potential under incoming CEO Peter Stern.

Market Forecast: Volatility Likely as Key Events Unfold

Given the U.S. election and Fed decision, markets are likely to experience volatility. A stable election result could support a year-end rally, while unexpected outcomes or divisive results may lead to choppy trading. If the Fed affirms rate cuts, markets may see a short-term boost. However, investors should prepare for potential fluctuations across key sectors driven by policy and political outcomes.