Benchmark indices began the new and important trading week on a positive note, closing the session with gains on Monday, October 26. However, none of the indices managed to sustain at the day’s high.
The Dow Jones ended 150 points higher, but after cooling 250 points from the highs of the session. The S&P 500 gained 0.7%, while the Nasdaq Composite ended 0.8% higher. At the day’s high, both the indices were trading with gains of over 1% each.
Tech stocks received a boost after Artificial Intelligence firm Anthropic PBC made their confidentially filed IPO papers public, which showed net loses amounting to over $80 billion for the first six months of the year.
Gains were kept in check by Meta Platforms, which announced a mega $95 billion fund raising plan, joining the ranks of Google-parent Alphabet, who has a $85 billion plan of its own, and SpaceX, which recently closed a $40 billion debt financing deal. Meta shares ended 2% lower overnight.
Crude oil prices cooled off slightly, partly due to technical factors as the Relative Strength Index (RSI) on the charts had crossed the “overbought” threshold of 70 to hit levels of 74, along with news of delegates from Saudi Arabia, Turkey and Pakistan travelling to Iran, and meeting President Pezeshkian and other officials to diffuse ongoing tensions.
Bank of America though, has warned that in case Iran goes back to attacking regional infrastructure in the Gulf, crude oil prices could continue to average around $120 a barrel over the next few months.
HSBC Downgrades US Markets
In light of the recent developments, Max Kettner of HSBC, one of Wall Street’s most bullish analysts, downgraded US equities to “neutral” from his “Maximum Overweight” stance acquired months ago in March. He has cited worries over more stringent AI regulations in case the Democrats sweep the mid-term polls and the Iran war heating up again as the key reasons behind his decision.
He also upgraded his position on the developed market sovereign debt to “overweight”, adding that given the constant narrative change, it is difficult to have the same level of conviction any longer and that views, at minimum, may have to be updated on a weekly basis.
HSBC’s note follows that from Bank of America, which also expects the mood among investors to remain “risk-off” going well into November.
What Are The Key Wall Street Triggers Today?
The all important two-day meeting of the US Federal Reserve begins today, which will be the most important trigger for Wall Street over the next two days. Consensus is for a “Status Quo” policy this time around.
Consumer confidence data, new home sales, along with results from companies like Visa, Coca-Cola, Boeing and Novartis, will also be reported during the course of the day.