Dow Jones, Nasdaq 100 Climb on Trade Deal Hopes, Will Powell Derail the Optimism?

US Stock Futures Extend Gains with Trade Talks on Track

US stock futures extended their gains in early trading on Tuesday, October 14, as the US administration affirms a meeting between President Trump and President Xi.

However, US-China trade tensions simmered ahead of the highly anticipated APEC Summit, beginning on October 31.

New port fees took effect in on Tuesday, October 14, lifting fees on the transportation of goods. CN Wire reported:

“On Tuesday, both the United States and China will start charging additional port fees on ocean shipping companies transporting goods ranging from holiday toys to crude oil.”

The US began collecting fees, making President Trump’s threat of fees on China-linked vessels a reality. Trump continues to target China’s dominance in global maritime trade while attempting to strengthen the US position in shipbuilding.

Meanwhile, China will collect fees on US-owned, flagged, or operated vessels.

The latest trade tariffs would likely be another talking point at the upcoming APEC Summit.

US Treasury Secretary Scott Bessent spoke overnight, stating that President Trump’s planned APEC Summit meeting with President Xi remains on track, easing fears of another escalation.

Optimism over a US-China trade agreement lifted US stock futures and bolstered demand for Mainland-listed stocks. The CSI edged 0.02% higher, while the Shanghai Composite Index gained 0.22% in morning trading.

US Stock Futures React to Trade Optimism

US stock futures advanced in morning trading on Tuesday, October 14, extending their gains from the previous session. The Dow Jones E-mini rose 79 points, the Nasdaq 100 E-mini gained 49 points, and the S&P 500 E-mini climbed 8 points.

Powell Speech Looms as Key Market Driver

Later on Tuesday, Fed Chair Powell will take center stage as markets bet on Fed rate cuts in October and December. Powell could cement expectations of multiple Fed rate cuts if he raises concerns about the US labor market and downplays risks of stagflation. US stock futures could climb to their recent record highs if this scenario unfolds.

On the other hand, rising concerns about stagflation, exacerbated by the US government shutdown, could send US stock futures lower, potentially reversing the previous day’s gains.

The Kobeissi Letter commented on US labor market trends, stating:

“The gap between Americans saying jobs are ‘plentiful’ and ‘hard-to-get’ fell to 7.8% in September, the lowest since 2021. This is the weakest reading in 8 years outside the 2020 pandemic spike. Historically, this measure has been a leading indicator of unemployment, suggesting higher jobless claims ahead. According to Moody’s, there is no better predictor of changes in employment than this metric. The Fed will have no choice but to continue cutting rates.”

The deteriorating labor market has signaled a more dovish Fed rate path. According to the CME FedWatch Tool, the chances of back-to-back 25-basis point rate cuts in October and December stood at 96.7% and 92.2%, respectively.

Meanwhile, traders should closely monitor Capitol Hill, where potential votes on stopgap funding bills could influence sentiment. An extended Senate stalemate could weigh on risk assets. A prolonged shutdown may slow GDP growth and increase risks of stagflation. On the other hand, US stock futures could trend higher if the Senate passes a stopgap funding bill.

Despite these headwinds, technical indicators suggest underlying momentum remains bullish.

Key Technical Levels for Dow Jones, Nasdaq 100, and S&P 500

Following the morning gains, US stock futures remained above the 50-day and 200-day Exponential Moving Averages (EMAs), reaffirming bullish momentum.

However, the near-term outlook hinges on US-China trade headlines, the Senate vote, and Fed Chair Powell’s policy stance. Key levels traders should monitor include:

Dow Jones

• Resistance: 46,500, 47,000, the October 3 record high of 47,323.
• Support: 46,000, the 50-day EMA (45,830).

Nasdaq 100

• Resistance: 25,000, October 9 record high of 25,394, 25,500.
• Support: 24,500, the 50-day EMA (24,226).

S&P 500

• Resistance: October 9 record high of 6,812, 7,000.
• Support: 6,600, the 50-day EMA (6,581).

October Market Outlook: Capitol Hill and Powell in Focus

US stock futures face a crucial session as Fed Chair Powell and the Senate will be in the spotlight.

US stock futures would likely advance if Powell supports back-to-back rate cuts. However, Powell could trigger a sell-off if he raises stagflation risks and suggests a pause in rate cuts to tackle sticky inflation.

US-China trade developments and Senate votes on stopgap funding bills will also influence risk appetite.

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