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NASDAQ 100, Dow Jones, S&P 500 News: Investors Brace for Extended Fed Rate Hikes

By:
James Hyerczyk

As September wraps, S&P 500 wavers amid rate hikes and fiscal uncertainties, while media stocks rise and growth avenues persist for keen investors.

Nasdaq Composite, S&P 500 Index, Dow Jones

Highlights

  • Dow, S&P 500, and Nasdaq futures rise slightly.
  • S&P 500 set for its worst month since December.
  • Fiscal deadlock persists in Washington.
  • Major media stocks rally in pre-market trading.

Market Reaction to Fed’s Interest Rate Indications

As September’s trading week comes to a close, stock futures are experiencing slight gains, recovering from earlier hits. Despite these fluctuations, the market largely remains quiet and with limited activity. By 10:35 GMT, the Dow Jones Industrial Average futures saw a minimal rise, alongside a tiny uptick in both S&P 500 and Nasdaq 100 futures.

Daily E-mini S&P 500 Index

Market Hurdles: Rate Hikes and Global Uncertainties

This month’s most significant challenge for stocks has been the Federal Reserve’s hint at maintaining elevated interest rates for an extended period. Such indications have accelerated bond yields, with the 10-year Treasury yield making a noticeable leap to 4.43%. Additionally, a booming crude oil market and a strengthening dollar have added to the market’s struggles during this typically low trading month.

The repercussions have been evident as the S&P 500 is on track to register its poorest performance since last December. Furthermore, the Nasdaq Composite, impacted severely by the downturn in growth stocks, is eyeing its steepest monthly decline since the same period. Meanwhile, the Dow has seen a more moderate decrease.

Anticipation Amid U.S. Fiscal Discussions

Investors are keeping a close eye on Washington’s budgetary progress. Over the weekend, there was scant evidence of any breakthroughs in achieving an agreement that would ensure consistent government funding for the rest of the fiscal year.

Media Stocks React to Writers’ Strike Resolution

In other market news, a preliminary agreement between Hollywood writers and studios brought positive momentum for media stocks. Shares for Disney, Paramount, and Warner Bros. Discovery surged in premarket trading due to this development. The tentative deal aims to conclude the Writers Guild of America’s ongoing strike, an event that has stretched for 146 days. The final details of the agreement are still in the drafting stages.

Earnings Outlook: Slight Dip, but Overall Optimism

Turning to earnings, projections for the S&P 500 companies suggest a marginal decline for the upcoming quarter, continuing the trend from the previous three quarters. However, John Butters, a senior earnings analyst at FactSet, brings a silver lining, stating that this decline is smaller than earlier predictions. Moreover, a vast majority of S&P 500 sectors are set to witness growth in their year-over-year third-quarter earnings. The forecast remains positive for the subsequent quarters, with expectations of notable profit growth in the coming year.

Closing Forecast: A Cautious Eye on the Horizon

Considering these developments, investors tread cautiously. The market’s immediate trajectory appears bearish, heavily influenced by interest rate speculations and global uncertainties. Yet, amidst the prevailing challenges, pockets of opportunities emerge, signaling potential avenues for growth and recovery for the discerning investor.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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