U.S. Markets Rise on Optimism Over Government Reopening and Easing Rate Expectations

Index Update:  U.S. stock futures rose on Wednesday, buoyed by optimism over a potential end to the government shutdown and strong corporate earnings. S&P 500 futures gained 0.4%, Dow futures rose about 80 points, and Nasdaq 100 futures advanced 0.7%. Lawmakers are set to vote on a funding deal to reopen the government, while major tech stocks traded higher premarket — including Nvidia (+1.5%), Microsoft, Apple, Amazon, Meta, and Alphabet. AMD surged 5% after projecting faster sales growth, adding to upbeat sentiment following the Dow’s record close in the previous session.

Market Movers:  On Tuesday, the top gainers were Ridgetech, Inc. (+73.81%), followed by enGene Holdings Inc (+46.76%). On the contrary Outset Medical, Inc. (-48.47%), and Vor Biopharma Inc. (-47.66%) declined the most the same day.

Commodities Update:  Oil and gold prices retreated slightly on Wednesday as markets awaited key economic and energy updates. WTI crude fell to $60.5 per barrel and Brent crude dropped below $65, ending a three-session rally amid expectations of a supply surplus as OPEC+ and other producers ramp up output. The IEA revised its forecast, now expecting global oil demand to keep rising through 2050, while U.S. sanctions on Russian oil firms and increased Middle East exports to India helped limit losses. Meanwhile, gold hovered near $4,130 per ounce, close to a two-week high, supported by growing bets on a Federal Reserve rate cut amid labor market weakness. Traders see a 68% chance of a 25 bps cut next month, while optimism over an imminent end to the U.S. government shutdown reduced some safe-haven demand.

Macro Updates:  U.S. mortgage applications rose 0.6% in the first week of November, rebounding from a 1.9% decline the previous week, even as the average 30-year fixed mortgage rate edged up to 6.34% from 6.31%, according to the Mortgage Bankers Association (MBA). The rate remains 52 basis points lower than a year earlier. Home purchase applications surged around 6%, reaching their strongest level since September, while refinancing activity fell about 3% amid higher borrowing costs. MBA economist Joel Kan noted that buyers are still active in markets with increased inventory and slower price growth, marking the strongest start to November since 2022.

Bonds Commentary:  The 10-year U.S. Treasury yield fell nearly 5 basis points to 4.08% on Wednesday as weakening labor data strengthened expectations of a Federal Reserve rate cut. ADP data showed private employers cutting about 11,250 jobs per week through late October, while the government shutdown delayed official jobs figures. Markets now see a 68% chance of a 25 bps cut in December, up from 62% a day earlier. The Fed is also expected to pause its balance sheet runoff and increase Treasury bill purchases at month-end. Optimism grew that the record-long government shutdown may soon end, with the House preparing to vote on a funding bill.

Futures Update:  U.S. stock futures rose slightly on Wednesday as investors awaited confirmation of a deal to end the record-long federal government shutdown. Dow futures were up 0.2%, S&P 500 futures gained 0.4%, and Nasdaq futures advanced 0.7%. On Tuesday, Wall Street closed mixed — the Dow climbed 1.2% and the S&P 500 added 0.2%, while the Nasdaq slipped 0.3% — as optimism over a government reopening was tempered by weak ADP jobless claims data, indicating slowing labor market momentum.

 Following the rally observed at the beginning of the week, major US indices moved in the opposite direction during trading on Tuesday. The S&P 500 declined by 14.20 points, or 0.21%, closing at 66,846.62. From a technical perspective, the index found support at key levels and gradually rebounded, indicating the potential for further gains in the near term. Additionally, the 14-day Relative Strength Index (RSI) reversed from the mid-point and is trending upward, reflecting renewed buying momentum. Key support levels are around 6,755, with resistance expected near 6,900.