U.S. stock futures fell overnight Sunday as investors prepared for Tuesday's U.S. presidential election results and Thursday's Federal Reserve interest rate decision.
Dow Jones Industrial Average futures lost 0.3%, S&P 500 futures fell 0.2% and Nasdaq 100 futures fell 0.3%.
Stocks started November on a strong note, with Amazon and other big tech stocks boosting the Nasdaq Composite by 0.8% and the S&P 500 by about 0.4%. The Dow Jones Industrial Average added about 289 points, or about 0.7%.
The outcome of Tuesday’s election, which could lead to a political split or a unity government depending on who wins, will play a pivotal role in determining how stocks move through the rest of the year. The latest poll shows a deadlocked race between former President Donald Trump and Vice President Kamala Harris, with it hard to predict who will win.
Despite the uncertainty, much of the market’s aftershocks could hinge more on which party controls Congress. If control of the U.S. House of Representatives and Senate is split, it will maintain the status quo.
A Republican or Democratic sweep would also likely be coupled with the same party winning the White House, and could mean new spending plans or tax reform.
For some Wall Street economists, the election is a major hurdle that markets must overcome to rally toward the end of the year, with Sam Stovall of CFRA Research noting that, according to data going back to 1944, a prematurely strong showing in election years often translates into further improvement in the economy in November and December.
“I think we're going to see some volatility next week, there's a lot of action, but I think once we get through that, we'll rally into November and December,” she told The Closing Bell on Friday.
Fed decision and future of interest
Elections aside, Wall Street is bracing for the Fed’s decision on interest rates. So far, traders are pricing in a 96% chance of a rate cut at the end of the central bank’s policy meeting, according to CME Group’s FedWatch tool.
This will be followed by a large 50 basis point move in September, according to expectations.
Investors will be more focused on Fed Chair Jerome Powell's comments after the meeting, as Wall Street looks for more information on the central bank's rate moves.
Earnings season continues, with about a fifth of the S&P 500 due to report in the coming week. About 70% of companies that have already reported results beat estimates, according to FactSet data.
According to the market calendar, Super Micro Computer, Moderna, CVS Health, Qualcomm, and Wynn Resorts will be among the companies that will report in the coming days.
