Dow Jones & Nasdaq 100 Rise as China Profits Jump, Fed Speakers in Focus

China’s Profit Rebound Revives Growth Hopes

Chinese economic data continues to face intense scrutiny as September draws to a close. After a string of disappointing reports, industrial profit figures revived hopes that Beijing could achieve its 5% GDP growth target for 2025.

Industrial profit soared 20.4% year-on-year (YoY) in August after falling 1.5% in July. From January to August, industrial profit increased 0.9% YoY, down marginally from 1.7% in July. Manufacturers saw profits rise 7.4%, helping offset weakness in other sectors and driving the overall 0.9% gain.

The upswing in manufacturing sector profits came despite US tariffs hitting external demand. August’s figures suggested that Beijing’s efforts to combat price wars, overcapacity, and deflation are gaining traction.

August’s data came ahead of China’s Golden Week holiday, which traders will monitor closely for travel and consumption trends.

US stock futures benefited from the upswing in Chinese industrial profits, which eased concerns of a further loss of momentum in China’s economy. Rising profits could bolster the labor market, lift wages, and fuel domestic demand.

How Are US Stock Futures Reacting Ahead of Key Data?

US stock futures posted solid gains in morning trading on Monday, September 29. The Dow Jones E-mini rose 76 points, the Nasdaq 100 E-mini gained 58 points, and the S&P 500 E-mini advanced 13 points.

US stock futures extended their gains from Friday, September 26, as US inflation numbers bolstered expectations of an October Fed rate cut. The US Core PCE Price Index increased 2.9% year-on-year in August, matching July’s pace.

According to the CME FedWatch Tool, the chances of a 25-basis-point October rate cut rose from 87.7% on September 26 to 89.3% in early trading. 10-year US Treasury yields fell in early trading, while gold climbed 0.7% to $3,785, reflecting expectations of further Fed policy easing.

Fed Rhetoric in Focus: Can Doves Keep Momentum Alive?

Still, optimism hinges on whether policymakers reinforce these expectations. Fed commentary later in the day could prove pivotal.

Fed Vice-Chair John Williams and FOMC members Beth Hammack, Alberto Musalem, and Christopher Waller are due to speak today.

Support for an October rate cut could lift sentiment, while hawkish rhetoric may weigh on US stock futures.

Global Rate Cuts Underscore Fed’s Late Pivot

The Kobeissi Letter contrasted central bank monetary policy decisions in the last 12 months with previous easing cycles, stating:

“The global pivot: World central banks have cut rates 168 times over the last 12 months, the 3rd highest reading this century. The previous cycle peak was 196 cumulative 12-month rate reductions in June 2020. By comparison, following the 2008 Financial Crisis, global central banks cut rates as many as 249 times in the 12 months ending October 2009.”

Commenting on the Fed’s policy pivot, The Kobeissi Letter added:

“While the US Fed was one of the last to join the rate cut cycle, two more rate cuts are expected by year-end. The Fed is joining the pivot in global monetary policy.”

The impact of the Fed pivot on US stock futures will hinge on the US economy. A US recession could send US stock futures crashing, while a soft landing may fuel the rally.

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

Following the morning gains, US stock futures traded comfortably above the 50-day and 200-day Exponential Moving Averages (EMAs), reaffirming a short-term bullish bias.

However, the near-term outlook hinges on trade developments, Chinese economic data, the Bank of Japan’s policy stance, FOMC members’ speeches, and upcoming US labor market data. Key levels traders are monitoring include:

Dow Jones

• Resistance: The September 23 record high of 47,055.
• Support: 46,500, 46,000, and then the 50-day EMA (45,405).

Nasdaq 100

• Resistance: September 22 record high of 25,027 and 25,250.
• Support: 24,500, 24,000, and the 50-day EMA (23,792).

S&P 500

• Resistance: September 22 record high of 6,757, followed by 7,000.
• Support: 6,600 and then the 50-day EMA (6,494).

Why Is This Week Crucial for the Market Outlook?

Beyond chart dynamics, broader catalysts loom large, making this week particularly crucial for influencing sentiment heading into Q4.

Traders should closely monitor Bank of Japan commentary and USD/JPY trends. A hawkish BoJ and dovish Fed could trigger a yen carry trade unwind, affecting risk assets. However, China’s private sector PMIs (September 30), trade developments, and US labor market data will also influence sentiment.

Upbeat Chinese data, easing US-China trade tensions, and dovish Fed rhetoric could boost risk appetite going into the fourth quarter. However, rising US recession risks, weak Chinese data, and increasing trade tensions could set US futures markets up for a choppy start to the final quarter.

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