US Pre-Market Open – Mixed Trading as Eyes on Earnings & Election

Investors are awaiting earnings reports next week from major mega-caps and ponder presidential elections in 11 days.

Next week investors will get earnings reports from the largest companies in the US. On Tuesday, Alphabet kickstarts the earnings with. Followed by Microsoft and Meta on Wednesday. And to close the week we will see the earnings reports from Apple and Amazon on Thursday.

Yesterday’s report from Tesla gave investors a renewed bullish momentum about the stock, which rallied 20%. Tesla CEO Musk forecast a surge in sales and reassured investors he was still focused on the EV maker’s core business.

Fed policy sentiment is still dovish as the market expects to see back-to-back interest rate cuts. Inflation data is falling in line and jobs growth is not as expansive as it has been. Both factors are fundamental for further central bank action.

The likelihood of a rate cut in 13 days as calculated by the CME FedWatch tool is currently at 95%. The other 5% is for rates to stay on hold. While the probability of a third cut in December is at 75%.

The market is pricing in the trough of the loosening cycle at 3.5% by Q3 2025.

Presidential Election Uncertainty

US stock markets’ new highs set to lead to major indices closing the weak lower, with the DOW down 1.87% on the weak. Despite a flurry of positive economic data and dovish Fed policy outlook, markets are wavering. Concerns are mounting about the outcome of the presidential election.

While bookmakers are calling the possibility of a Trump victory at 66%, other mainstream media polls show a much smaller lead. A victory for the Republican party candidate may lead to a trade war with China, raising concerns for the economic growth of the USA.

While tax cuts for corporates and individuals, coupled with less bureaucracy, would fuel economic expansion. The view of the policies that might be implemented is still uncertain, as defendants and opposers of a possible Trump second term battle out the direction of the market.