S&P Futures Tick Higher Ahead of FOMC Meeting and U.S. Retail Sales Data

September S&P 500 E-Mini futures (ESU25) are trending up +0.23% this morning as investors brace for the start of the Federal Reserve’s two-day policy meeting, where it is widely expected to cut interest rates, while also awaiting U.S. retail sales data.

In yesterday’s trading session, Wall Street’s main stock indexes closed higher, with the S&P 500 and Nasdaq 100 notching new record highs. Seagate Technology (STX) climbed over +7% and was the top percentage gainer on the S&P 500 after Bank of America raised its price target on the stock to $215 from $170. Also, Alphabet (GOOGL) gained more than +4% after Citi raised its price target on the stock to $280 from $225. In addition, Tesla (TSLA) rose over +3% after CEO Elon Musk bought about $1 billion worth of the EV maker’s shares. On the bearish side, Corteva (CTVA) slumped more than -5% and was the top percentage loser on the S&P 500 after several analysts questioned the merits of a potential breakup of the agriculture company’s seed and pesticide businesses.

Economic data released on Monday showed that the Empire State manufacturing index fell to a 3-month low of -8.70 in September, weaker than expectations of 4.30.

The Fed kicks off its two-day meeting later in the day. The central bank is widely expected to cut the Fed funds rate by 25 basis points to a range of 4.00% to 4.25% on Wednesday. Investors will be watching Chair Jerome Powell’s post-policy meeting press conference for any indications on how quickly rates may fall from here. Following recent data painting a picture of a slowing labor market, U.S. money markets have almost fully priced in follow-up rate cuts in October and December. Market watchers will also closely parse the Fed’s quarterly “dot plot” in its Summary of Economic Projections, which will offer key guidance on how policymakers expect the interest-rate path to unfold over the next few years.

“Now the discussion will turn to how aggressively the Fed will act. The Fed may remind everyone that it may be focused on jobs now, but it hasn’t forgotten about the other half of its mandate,” said Chris Larkin at E*Trade from Morgan Stanley.

In other Fed news, a federal appeals court ruled on Monday that Fed Governor Lisa Cook can continue serving at the central bank while her legal case proceeds, upholding a lower court’s decision. Also, President Trump’s economic adviser Stephen Miran is set to join the Fed’s board after the Senate confirmed him to the post on Monday night.

On the economic data front, all eyes are focused on U.S. Retail Sales data, which is set to be released in a couple of hours. Economists, on average, forecast that Retail Sales will show a +0.2% m/m increase in August following a +0.5% m/m climb in July.

Investors will also focus on U.S. Core Retail Sales data, which rose +0.3% m/m in July. Economists expect the August figure to climb +0.4% m/m.

U.S. Industrial Production and Manufacturing Production data will be released today. Economists expect Industrial Production to drop -0.1% m/m and Manufacturing Production to be unchanged m/m in August, compared to the July figures of -0.1% m/m and no change m/m, respectively.

U.S. Export and Import Price Indexes will be released today as well. Economists anticipate the export price index to drop -0.1% m/m and the import price index to fall -0.2% m/m in August, compared to the previous figures of +0.1% m/m and +0.4% m/m, respectively.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.040%, up +0.12%.

The Euro Stoxx 50 Index is up +0.02% this morning, taking a breather after three sessions of gains, while investors digest a slew of economic data from the region and await the Fed’s monetary policy verdict on Wednesday. Luxury and mining stocks climbed on Tuesday. At the same time, bank and insurance stocks underperformed. Data from the Office for National Statistics released on Tuesday showed that the U.K.’s unemployment rate was unchanged in the three months to July as pay growth eased slightly, likely keeping the Bank of England on track to leave its key interest rate unchanged at this week’s meeting. Separately, final data from the statistics agency Istat confirmed that Italy’s annual inflation rate eased to 1.6% in August from 1.7% in July. In addition, the ZEW economic research institute reported that German investor morale unexpectedly rose in September, signaling cautious optimism about the economy. Meanwhile, France’s central bank cut its economic outlook for the next two years by 0.1 percentage point, cautioning about downside risks from budget uncertainty after another government collapse. In other news, senior U.S. officials said on Monday that President Donald Trump expects to announce economic deals worth more than $10 billion during his trip this week to the United Kingdom. In corporate news, Sthree Plc (STEM.LN) tumbled over -20% after the employment service provider issued a profit warning.

U.K. Average Earnings ex Bonus, U.K. Unemployment Rate, Italy’s CPI, Germany’s ZEW Economic Sentiment Index, Eurozone’s ZEW Economic Sentiment Index, Eurozone’s Industrial Production, and Eurozone’s Labor Cost Index were released today.

U.K. Average Earnings ex Bonus stood at 4.8% in the three months to July, in line with expectations.

The U.K. Unemployment Rate was 4.7% in the three months to July, in line with expectations.

The Italian August CPI rose +0.1% m/m and +1.6% y/y, in line with expectations.

The German September ZEW Economic Sentiment Index came in at 37.3, stronger than expectations of 25.3.

The Eurozone September ZEW Economic Sentiment Index stood at 26.1, stronger than expectations of 20.3.

Eurozone July Industrial Production rose +0.3% m/m and +1.8% y/y, compared to expectations of +0.4% m/m and +1.7% y/y.

The Eurozone Labor Cost Index arrived at +3.60% y/y in the second quarter, weaker than expectations of +3.70% y/y.

Asian stock markets today settled in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.04%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.30%.

China’s Shanghai Composite Index closed just above the flatline today as cautious sentiment prevailed, with investors weighing uncertainties surrounding U.S.-China trade talks. Strength in technology stocks lent support to the overall market on Tuesday. However, rare-earth, financial, and consumer stocks retreated. U.S. President Donald Trump said on Monday he would speak with Chinese leader Xi Jinping on Friday after U.S. and Chinese officials reached a framework agreement in Madrid to keep the TikTok app operating in the U.S. The two sides “reached a basic framework consensus on properly resolving TikTok-related matters through cooperation, reducing investment barriers and promoting relevant economic and trade cooperation”, according to Chinese state-owned Xinhua News Agency. At the same time, China increased the pressure on Washington during sensitive trade negotiations, with the country’s market regulator stating on Monday that Nvidia breached anti-monopoly laws with a high-profile 2020 deal. Also, China launched an anti-dumping investigation into some U.S.-made analog chips over the weekend. Nanhua Futures analysts said in a note that “stock indexes are likely to remain range-bound in the short term” as markets focus on U.S.-China trade talks and the Fed’s meeting later this week.

Japan’s Nikkei 225 Stock Index closed higher and hit a new record high today, tracking overnight gains on Wall Street. Automobile stocks outperformed on Tuesday, buoyed by the formal implementation of a lower 15% U.S. tariff rate on imports of automobiles and auto parts from Japan. Chip stocks also advanced. The Cabinet Office said on Tuesday that Japan’s output gap for the second quarter was revised upward to 0.3%, its highest level since July-September 2019, reflecting revised GDP data. Meanwhile, the yen strengthened against the dollar on Tuesday, partly supported by the entry of Japan’s Agriculture Minister Shinjiro Koizumi into the ruling Liberal Democratic Party’s leadership race. Koizumi is expected to favor continued policy tightening by the Bank of Japan and oppose a consumption tax cut, according to CBA’s Carol Kong. Investor focus this week is on the BOJ’s policy decision, where the central bank is expected to keep its short-term policy rate unchanged at 0.5%. Investors will be parsing whether Governor Kazuo Ueda hints at the possibility of future rate hikes as growth remains steady and inflation stays elevated. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed down -1.27% to 24.13.

Pre-Market U.S. Stock Movers

Most members of the Magnificent Seven stocks advanced in pre-market trading, with Tesla (TSLA) and Alphabet (GOOGL) rising more than +1%.

Oracle (ORCL) climbed over +4% in pre-market trading after CBS News reported that the company is among a consortium of firms that would enable TikTok to continue operating in the U.S. if the framework deal with China is finalized.

Prologis (PLD) gained more than +1% in pre-market trading after BofA upgraded the stock to Buy from Neutral with a price target of $130.

CoreWeave (CRWV) rose over +1% in pre-market trading after Citizens JMP upgraded the stock to Outperform from Market Perform with an $180 price target.

Dave & Buster’s Entertainment (PLAY) plunged over -17% in pre-market trading after the arcade-restaurant operator posted downbeat Q2 results.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Tuesday - September 16th

Ferguson (FERG), Ispire Tech (ISPR), Evolution Petroleum (EPM), Brand House Collective (TBHC), Flux Power Holdings (FLUX).