Stock futures edged lower as investors awaited the Federal Reserve’s decision on interest rates, capping off a challenging month for Wall Street.
Dow Jones Industrial Average stock market rally showed a 113-point drop, a 0.30% decline. Meanwhile, S&P 500 futures and Nasdaq 100 futures both shed around 0.40% of their value.
Earnings Reports Impact The Mark Stock Futures
Earnings reports had a notable impact on the market. Yum China Holdings saw its shares tumble by 12.00% after missing revenue estimates for the third quarter. Shares of Match Group, the parent company of Tinder, fell 6.20% following disappointing revenue guidance for the fourth quarter. Advanced Micro Devices (AMD) also saw a 2.00% decline due to a disappointing outlook for fourth-quarter revenue.
The Spotlight Turns To The Federal Reserve
Investor attention is now focused on the Federal Reserve’s policy announcement. The CME FedWatch Tool indicates a more than 99.00% probability that the central bank will keep rates unchanged. The decision is set to be released at 2 p.m. ET, and Chair Jerome Powell will hold a news conference at 2:30 p.m. ET.
Reflecting On A Challenging October
October was a challenging month for Wall Street, with the Dow and S&P 500 posting their first three-month losing streak since March 2020. The Nasdaq Composite also declined by 2.80% in October, primarily due to concerns about rising bond yields.
Hoping For A Smoother November For The Stocks
Investors are hoping for a smoother November, but they remain cautious about increasing bond yields. In October, the 10-year US Treasury yield crossed the 5% threshold for the first time since 2007, raising concerns about the impact of extended periods of high-interest rates.
CVS Beats Earnings Expectations
In the midst of these market uncertainties, CVS reported third-quarter results that surpassed expectations, thanks to strong sales in its health services division. The pharmacy operator earned $2.21 per share on $89.76 billion in revenue, outperforming analysts’ estimates. However, CVS did slightly trim its full-year earnings guidance.
Federal Reserve’s Decision Looms
The Federal Reserve’s decision, scheduled for 2 p.m. ET, is highly anticipated by investors. While it is expected that the central bank will maintain its current interest rates, investors will closely follow Chair Jerome Powell’s news conference for any insights into future monetary policies.
European Trending Stocks Open With Gains
European stocks started the day with gains as global markets aimed to recover from a lacklustre October. The Stoxx 600 index saw an increase of 0.48%, with health care, autos, and retail stocks leading the way. France’s CAC 40 index and Germany’s DAX, along with the UK FTSE 100, all rose by 0.40%.
A Unique Buying Opportunity For Stocks
According to Richard Bernstein Advisors (RBA), the stock market is on the verge of a “once-in-a-generation” buying opportunity. Corporate profit indicators, both in the US and global stock markets, have hit a trough, suggesting that earnings are poised for significant growth across various sectors.
RBA is optimistic about the acceleration of corporate profits through the end of 2023 and into 2024. The firm anticipates a 10.00%-15.00% growth in S&P 500 earnings through 2024.
These positive trends are bolstered by a robust economy, with a substantial nominal GDP growth rate of 8.50% in the previous quarter, the highest since 2006. RBA’s analysis reveals that around 130 US companies have reported at least 25.00% earnings growth as of October.
Diversified Stock Management
RBA suggests that aside from the seven mega-cap tech giants, which have already seen substantial valuations, nearly all other investment opportunities are promising. This provides investors with the potential for a significant return on investment.
Bullish Outlook Despite Recent Challenges
Market forecasters maintain a bullish outlook for a stock market rally, notwithstanding recent monthly declines, as investors hold out hope for a strong November in the markets.
