US stock futures rose slightly in pre-market trading on Monday as investors braced for another week of potentially stock-moving events: the November 8 midterm elections and October consumer price data.
Futures linked to the S&P 500 (^GSPC) and the Dow Jones Industrial Average (^DJI) were up about 0.4%. Contracts in the tech-heavy Nasdaq Composite (^IXIC) rose by nearly the same margin after the index posted its worst weekly loss since January.
A batch of pessimistic corporate news renewed focus on the wreckage across tech stocks after disappointing earnings last week drove the sector’s biggest hitters – Apple (AAPL), Amazon.com (AMZN) and Alphabet (GOOGL) – to losses of at least 10 % last week.
Apple (AAPL) shares fell 1.2% ahead of the opening after the company said in a statement Sunday that it expects fewer shipments of its latest premium iPhone than previously expected, citing the COVID shutdown in China that has dented operations at its larger Foxconn smartphone factory. .
Elsewhere among the tech giants, Facebook affiliate Meta (META), which is down 73% to date from Friday’s close and is the worst-performing in the S&P 500 this year, is now expected to begin large-scale layoffs this week. According to a report from The Wall Street Journal on Sunday. Shares are up nearly 4% in early trading hours.
Election day may keep investors on edge as dozens of major races determine which political party controls the congressional agenda. Wall Street has historically preferred that Congress or the White House be divided, as deadlock makes it difficult to implement any potentially unfavorable legislation.
“Back in 1929 and with the exception of the Great Depression, some of the best annual returns for the S&P 500 were seen when the incumbent president did not have complete control of both sides of Congress,” he said in the email comment. “This may be because markets are not anticipating major changes to the law with a divided Congress.”
While political campaigns have highlighted financial leadership, some strategists argue that mid-term results rarely affect financial markets outside of short-term volatility.
“Markets are more influenced by expected financial conditions and economic catalysts than by the midterm elections,” Dave Sekera, head of US market strategy at Morningstar, said in a recent note. “Historically, some analyzes have shown that stock markets tend to underperform in the run-up to the midterms and outperform thereafter.”
With that said, the October Consumer Price Index (CPI) released on Thursday is sure to weigh on the stock markets. Another hot inflation reading may boost expectations that the Federal Reserve will raise its key interest rate more than initially expected.
Economists polled by Bloomberg see the headline CPI at 7.9% annually for the month, a moderation from September’s 8.2% annual increase. Core CPI, which excludes volatile food and energy components from the scale, is expected to come in at 6.5%, unchanged from 6.6% last month.
“It’s possible that core inflation has peaked, but core inflation reached its post-pandemic high just last month,” said Ross Mayfield, Baird’s investment strategy analyst, in an email note. “While the Fed has hinted that it sees reasons to slow down, the rate of inflation – even if it has peaked – remains too high to comfort it.”
“Until the Fed signals the ‘pivot’ approaching, things may still be tough,” he added.
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter Tweet embed
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