US Stock Futures React to Trade Tensions and Fed Rate Cut Bets
US stock futures posted mixed performances in early trading on Thursday, October 16. The Dow Jones E-mini rose 6 points, while the Nasdaq 100 E-mini dropped 25 points and the S&P 500 E-mini declined 7 points. Expectations of back-to-back Fed rate cuts in October and December limited the downside.
According to the CME FedWatch Tool, the probability of 25-basis-point cuts in October and December stood at 97.8% and 92.8%, respectively.
Fed Speakers and Capitol Hill in the Spotlight
Later on Thursday, the absence of key US economic data will expose US stock futures to Fed chatter. Several voting FOMC members are to speak, including Stephen Miran, Christopher Waller, Michael Barr, and Michelle Bowman.
Growing concerns about the labor market and the effects of a prolonged US government shutdown on the economy may boost demand for risk assets. However, calls to delay rate cuts to tame inflation and the risk of stagflation may weigh on sentiment.
Despite rising downside risks to the US and global economy, technical indicators continue to show that underlying momentum remains bullish.
Key Technical Levels for Dow Jones, Nasdaq 100, and S&P 500
Despite a mixed start, US stock futures remained above the 50-day and 200-day Exponential Moving Averages (EMAs), reaffirming bullish momentum.
However, the near-term trend will hinge on US-China trade developments, the Senate vote, and Fed speakers. Key levels traders should monitor include:
Dow Jones
- Resistance: 47,000, the October 3 record high of 47,323.
- Support: 46,500, 46,000, the 50-day EMA (45,886).