Nasdaq, S&P 500 Futures Skyrocket After Last Week’s Record-Setting Rally As US-China Deal Hopes Buoy Sentiment: Portfolio Manager Expects Market Melt-up To Continue

• A Chinese official said the two sides reached a preliminary consensus on a host of topics, including export controls, fentanyl, and shipping levies, following a 2-day meeting over the weekend.
• The market bulldozed its way to new highs last week, buoyed by hopes of a U.S.-China deal, earnings, and a tame inflation report.
• The week will also feature earnings from big tech companies Apple, Microsoft, Alphabet, Meta, and Amazon.

U.S. stocks appear on track to build on their record gains, after the U.S. and China agreed on the framework of a trade deal, and amid optimism about big tech earnings due this week. The tame September inflation report released on Friday should keep hopes of a rate cut alive as the Federal Reserve Open Market Committee (FOMC), led by Chair Jerome Powell, meets this week to discuss rates.

According to the FedWatch Tool, which factors in futures traders' expectations, a 25 basis-point cut is likely following the 2-day meeting that kicks off on Tuesday. 

The week will also witness earnings from big tech companies Apple, Microsoft, Alphabet, Meta, and Amazon.

How Futures Are Trading

As of 4 a.m., ET on Monday, the Nasdaq 100 and Russell 2000 futures jumped over 1% and the S&P 500 and Dow futures climbed 0.84% and 0.66%, respectively.

On Stocktwits, retail sentiment toward the SPDR S&P 500 ETF (SPY), an exchange-traded fund that tracks the S&P 500 Index, remained ‘bearish’ heading into Monday’s session. Retail held a ‘bearish’ view on the Invesco QQQ Trust (QQQ) ETF, which tracks the Nasdaq 100 Index, although sentiment saw a modicum of improvement to the ‘neutral’ mood from the ‘bearish’ disposition seen a day ago. The message volumes on both streams remained ‘normal.’

The China Tidings

Following two days of talks between high-level delegations from the U.S. and China in Malaysia, which concluded on Sunday, both sides struck a positive note. While a Chinese official said the two sides reached a preliminary consensus on a host of topics, including export controls, fentanyl, and shipping levies, U.S. Treasury Secretary Scott Bessent confirmed that the two sides had a “very good two days.”

Speaking to CBS, Bessent said, “I would believe that the so it would be an extra 100% from where we are now, and I believe that that is effectively off the table.” “So I would expect that the threat of the 100% has gone away, as has the threat of the immediate imposition of the Chinese initiating a worldwide export control regime.”

How Markets Traded Last Week

The market bulldozed its way to new highs, with the S&P 500, Nasdaq Composite, Nasdaq 100, and Dow Jones Industrial Average closing higher for a second straight week. All three averages are now perched in record territory. Hopes concerning a U.S.-China deal, earnings catalysts, and a tame inflation report triggered strong buying interest in the market.

For the week ended Oct. 24, the SPY, QQQ,  iShares Russell 2000 ETF (IWM), and SPDR Dow Jones Industrial Average ETF Trust (DIA) climbed 1.94%, 2.18%, 2.47% and 2.26%, respectively.

Key Catalysts To Watch Out For

In the absence of any significant economic catalysts due to the government shutdown that is now into its 27th day, traders will likely focus on earnings reports from Keurig Dr Pepper (KDP), Agilysys (AGYS), Bed Bath & Beyond (BBBY), Nucor (NUE), NXP Semiconductor (NXPI), Whirlpool (WHR), and Rambus (RMBS). 

In a post on X, the ortfolio manager and founder of Niles Investment Management, Dan Niles, said he looks for the market melt up to continue this week, driven by a likely Fed rate cut and winding down of quantitative easing, solid earnings in aggregate from 5 of the Magnificent Seven companies, and a positive meeting between U.S. President Donald Trump and his Chinese counterpart Xi Jinping on Thursday.

How Other Markets Fared

Amid the risk-on mood set by the U.S.-China trade talks, crude oil futures traded flat early Monday, gold futures slipped below $4,100, and the 10-year U.S. Treasury note yield rose above 4%. The U.S. dollar was marginally lower against most major counterparts, with the U.S. Dollar Index trading below the ‘99’ mark.

The major Asian markets rallied across the board amid rising risk appetite, driven by waning geopolitical worries. 

For updates and corrections, email newsroom[at]stocktwits[dot]com.

Read Next: AiRWA Retail Traders Bet On Massive Short Squeeze As 1-for-50 Reverse Split Kicks In

Share

·

Add us on