New York Stock Market Rises Early This Week Ahead of FOMC and Apple Earnings

The three major indices of the U.S. New York stock market showed an early upward trend on Monday, the 30th (local time), ahead of key events scheduled for this week, including the Federal Reserve's Federal Open Market Committee (FOMC) meeting, earnings announcements from Apple, the largest company by market capitalization, and major economic indicators such as the employment report.

At around 10:17 a.m. at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average, which focuses on blue-chip stocks, was trading at 32,682, up 0.82% from the previous close. The S&P 500, centered on large-cap stocks, rose 0.66% to 4,144, while the tech-heavy Nasdaq index increased 0.93% to 12,760.

Currently, all 11 sectors within the S&P 500 are in positive territory. Telecommunications stocks rose more than 1%. Amazon and Meta Platforms climbed over 2% compared to the previous close. Microsoft, Google Alphabet, Netflix, and Nvidia also saw gains in the 1% range. Apple, which is scheduled to report earnings this week, showed a firm upward trend. McDonald's rose more than 1% after reporting quarterly earnings that exceeded expectations. SoFi Technologies also jumped 2.6% after posting strong results and raising its annual guidance. On the other hand, General Motors (GM) fell more than 1% following news of a tentative agreement with the United Auto Workers (UAW) union, including wage increases.

[Image source=Reuters Yonhap News]

Investors are awaiting major events this week such as the FOMC meeting, the employment report, and Apple's earnings announcement. They appear to be looking for a rebound opportunity for the S&P 500 and Nasdaq indices, which have entered a correction phase after falling more than 10% from their previous highs. Tom Essaye, founder of The Sevens Report, commented, "This week will be very busy with the Fed's (interest rate) decision, important economic indicators, and corporate earnings."

With the FOMC meeting scheduled for October 31 to November 1, a rate hold is widely expected. Investors will likely focus on the press conference by Fed Chair Jerome Powell immediately afterward to gauge the direction of monetary policy after December. Attention is also on Powell's assessment of recent rises in Treasury yields, as well as economic and inflation conditions.

The market currently favors a rate hold. According to the Chicago Mercantile Exchange (CME) FedWatch tool, as of this day, federal funds futures reflect more than a 98% probability that the Fed will keep rates steady at 5.25% to 5.5% during this meeting. The probability of a hold in December is also above 74%. The chance of a "baby step" hike in December stands at around 24%. Despite expectations of prolonged high rates, the market is pricing in a low likelihood of rate hikes within this year.

Additionally, key U.S. economic indicators such as the October employment report and PMI will be released this week. The nonfarm payroll increase, scheduled for release on November 3, is expected to be around 170,000 to 180,000. The unemployment rate is forecasted at 3.8%. Since the Fed has indicated that below-trend low growth and labor market cooling are necessary to reduce inflation, market attention is focused on whether signs of employment slowdown will be confirmed in this month's report.

Before the Fed, the Bank of Japan (BOJ) will also decide on monetary policy on October 30-31. The key issue is whether there will be any mention of adjusting the long-term interest rate cap. Previously, the BOJ maintained the fluctuation range of long-term interest rates at ±0.5% but expanded the level of government bond purchases to ±1.0%. Besides Japan, the Bank of England (BOE) and the Norges Bank will also hold monetary policy meetings.

In the New York bond market, the benchmark 10-year U.S. Treasury yield rose to around 4.92%. The 2-year yield, which is sensitive to monetary policy, increased to about 5.05%. The dollar index, which measures the value of the U.S. dollar against six major currencies, moved down 0.2% to around 106.3. The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), known as Wall Street's "fear gauge," fell more than 3% to the 20 level.

The Treasury Department's announcement of its fourth-quarter borrowing plan, released ahead of the Fed's rate decision, is also expected to have an immediate impact on the bond market. Bloomberg reported, "The Treasury will reveal how much it plans to increase long-term bond issuance to cover the fiscal deficit," adding, "Investor focus will be on the Treasury's announcement just hours before the rate decision." The market has already seen rising yields amid concerns about a surge in bond issuance in the second half of the year. If issuance is higher than expected, bond prices could fall further and yields could rise. Bond prices and yields move inversely. However, Katie Stockton, founder of Fairlead Strategies, appeared on CNBC's Squawk Box and suggested that Treasury yields may have already peaked.

After the market closes on November 2, Apple, the largest company by market capitalization, will release its earnings. As a large-cap stock accounting for more than 7% of the S&P 500, Apple's stock movement will inevitably have an immediate impact on the overall market. The earnings results of major big tech companies that have already reported have shown mixed reactions depending on future earnings outlooks. Ahead of its earnings announcement, Apple is scheduled to hold an online event in California this afternoon to unveil new Macs and processors.

Geopolitical risks from the Middle East continue. Israel has declared the second phase of its war against Hamas and expanded ground troop deployment in the Gaza Strip, drawing attention to the future course of the conflict and potential involvement of neighboring countries including Iran. Despite these geopolitical risks, international oil prices are currently declining as markets await the FOMC. The December West Texas Intermediate (WTI) crude oil price is trading around $83 per barrel, down more than 2% from the previous close.