Dow Jones & Nasdaq 100 Futures Rise Despite China PMI Weakness

US stock futures rallied in early trading on Friday, October 31, as traders looked to wrap up yet another stellar month. Traders reacted to upbeat earnings from Amazon.com (AMZN) and Apple (AAPL), which boosted demand for tech stocks. Traders brushed aside disappointment from President Trump’s meeting with President Xi and Fed Chair Powell’s less dovish stance.

Notably, US stock futures gains clashed with losses across Mainland China and Hong Kong equity markets. The Hang Seng Index dropped 0.53%, while the CSI 300 fell 0.77% over concerns about US-China trade terms and weakening manufacturing sector activity.

China NBS Manufacturing PMI Sends Warning Signals

China’s NBS Manufacturing PMI fell from 49.8 in September to 49.0 in October, signaling a sharper contraction across the manufacturing sector. Notably, the New Order Index declined from 49.7 to 48.8 as external demand slumped. The New Export Order Index tumbled from 47.8 in September to 45.9 in October. Production contracted for the first time since April as new orders fell for the fourth consecutive month.

While the manufacturing sector contracted more sharply, the NBS Non-Manufacturing PMI signaled modest growth, rising from 50.0 to 50.1.

CN Wire commented on October’s PMI numbers, stating:

“The overall economy shows resilience with the Composite at the threshold (50). October’s readings reflect a combination of seasonal effects around the ‘Golden Week’ and a cautious global backdrop contributing to softer manufacturing momentum, offset by solid service sector activity and improving construction sentiment.”

Hopes for a rebound in external demand have faded. While tariffs were recently reduced from 57% to 47%, they still remain far higher than the 3% level at the start of President Trump’s second term. The absence of a new trade deal and a 47% levy exposes Chinese manufacturers and the broader economy to downside risks.

Notably, the October PMI data weighed on demand for US stock futures, easing back from early highs. Elevated US tariffs on Chinese shipments could contribute to US inflationary pressures, potentially delaying further Fed rate cuts.

Fed Chair Powell commented on the link between tariffs and inflation during his Wednesday press conference. He stated that higher tariffs are resulting in rising overall inflation.

US Stock Futures: Capitol Hill and Fed Speakers in Focus

US stock futures steadied on Friday, October 31, after the previous day’s pullback. The Nasdaq 100 E-mini led the gains, jumping 306 points, with the S&P 500 E-mini advancing 43 points. Meanwhile, the Dow Jones E-mini gained 31 points.

Across the Pacific, Fed speakers could influence US stock futures later in the Friday session. FOMC members Lorie Logan and Beth Hammack, along with Atlanta Fed President Raphael Bostic, are on the calendar to speak.

Support to delay further rate cuts to assess the impact of tariffs on inflation could weigh on demand for risk assets, including US stock futures. Economists view the three as relatively hawkish.

Upbeat corporate earnings sent the Nasdaq 100 to new highs on Thursday, October 30. However, hawkish Fed rhetoric and fading bets on a December rate cut could revive concerns about stagflation, potentially weighing on US stock futures. James Lavish, former hedge fund manager and co-founder of Bitcoin Opportunity Fund, commented:

“The problem for the Fed right now is that their challenge of a ‘dual mandate,’ has become the challenge of a ‘dueling mandate,’ where prices continue to rise as unemployment also rises. Aka Stagflation.”

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

Following the morning gains, US stock futures remained comfortably above key technical levels, signaling bullish momentum.

The near-term trends will hinge on US Senate votes and Fed speakers. Key levels traders should monitor include:

Dow Jones

• Resistance: 48,000, the October 28 record high of 48,214, then 48,250.
• Support: 47,500, 47,000, the 50-day EMA (46,400).

Nasdaq 100

• Resistance: October 30 record high of 26,399, then 26,500.
• Support: 26,000, 25,750, 25,500, 25,000, the 50-day EMA (24,769).

S&P 500

• Resistance: October 29 record high of 6,952, then 7,000.
• Support: 6,750, the 50-day EMA (6,677), and 6,500.

Market Outlook: The Fed and Capitol Hill Take Center Stage

Traders should brace for a volatile end to the month, with Fed speakers and a Senate vote likely to influence risk sentiment.

A prolonged US government shutdown could affect the US economy amid rising stagflation risks. Elevated inflation, a deteriorating labor market, and a slowing economy would likely weigh on risk sentiment.

The Congressional Budget Office recently estimated the shutdown would cause permanent US GDP reductions, stating:

“Depending on its length, the government shutdown will reduce annualized real GDP growth in that quarter by 1.0 to 2.0 percentage points. After the shutdown, real GDP will be temporarily higher than it would have been otherwise. Although most of the decline in real GDP will be recovered eventually, CBO estimates that between $7 billion and $14 billion (in 2025 dollars) will not be.”

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