U.S. stock futures fell on Tuesday following Monday’s advances. Futures of major benchmark indices were lower.
The indices dropped as the possibility of a government shutdown neared, with the lawmakers having until Wednesday at 12:01 a.m. ET to reach an agreement.
Meanwhile, Vice President JD Vance stated outside the White House that “I think we’re headed to a shutdown because the Democrats won’t do the right thing,” placing the blame on Democratic leaders for linking government funding to healthcare negotiations.
Meanwhile, the 10-year Treasury bond yielded 4.13% and the two-year bond was at 3.60%. The CME Group’s FedWatch tool‘s projections show markets pricing an 89.3% likelihood of the Federal Reserve cutting the current interest rates in its October meeting.
The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, fell in premarket on Tuesday. The SPY was down 0.13% at $662.82, while the QQQ fell 0.060% to $598.37, according to Benzinga Pro data.
Cues From Last Session
Information technology, financial, and consumer discretionary stocks recorded the biggest gains on Monday, leading most sectors on the S&P 500 to a positive close. However, energy and communication services stocks bucked the overall market trend, closing the session lower. U.S. stocks settled higher, with the Nasdaq gaining more than 100 points.
Nvidia Corp. (NASDAQ:NVDA) shares closed higher by around 2%, while other AI stocks, including Advanced Micro Devices Inc. (NASDAQ:AMD) and Micron Technology Inc. (NASDAQ:MU), also recorded gains during the session.
Robinhood Markets Inc. (NASDAQ:HOOD) surged 12% on Monday after CEO Vlad Tenev revealed on social media that more than four billion event contracts have been traded on the platform since their launch.
Major indices, meanwhile, recorded losses last week, with the Nasdaq Composite falling 0.7% and the S&P 500 losing 0.3%. The Dow also fell 0.2% during the week.
On the economic front, U.S. pending home sales surged by 4% from the previous month in August, recording the sharpest gain in five months, compared to a 0.4% decline in the previous month.
The Dow Jones index ended 69 points or 0.15% higher at 46,316.07, whereas the S&P 500 index rose 0.26% to 6,661.21. Nasdaq Composite advanced 0.48% to 22,591.15, and the small-cap gauge, Russell 2000, gained 0.038% to end at 2,435.25.
Insights From Analysts
Economist Jeremy Siegel stated that last week’s predictable inflation numbers were “exactly what markets wanted,” signaling that the disinflation trend is holding firm and keeping the door open for the Federal Reserve to continue easing monetary policy.
In his weekly commentary, Siegel noted that the Personal Consumption Expenditures (PCE) deflator met all expectations, suggesting that recent price pressures are due to “one-off tariff and policy effects rather than underlying demand”. This stability gives the central bank room to lower interest rates further into an economy that is showing surprising resilience.
Despite the calm inflation data, growth metrics have firmed up, with positive surprises in durable goods and a narrower trade deficit pushing third-quarter GDP estimates higher. Siegel projects the economy is “healthy but not overheating,” with his base case for full-year growth remaining around 2.4%-2.5%.
This combination of steady inflation and solid growth supports further rate cuts. “I expect two 25 bp cuts into year-end, including at the October 29 meeting,” Siegel commented, adding that he would support continuing these small cuts through the first half of next year if conditions remain stable. He believes the Fed is “easing into strength rather than reacting to weakness,” a scenario that is highly favorable for the stock market.
While the overall outlook is positive, Siegel is monitoring three near-term risks:
The economic bite of tariffs should become clearer in Q4 holiday import data.
Fiscal noise, including a potential government shutdown that could disrupt economic data releases.
The money supply, which he sees as “the best assurance that today’s inflation stability persists into 2025”.
However, he clarified that “none of these risks alter my baseline that the economy enters Q4 with momentum and inflation control”.
Given this backdrop, Siegel anticipates that equities should continue to outperform nominal bonds. He concluded that a steady “glide path of 25 bp cuts” supports cyclical stocks, quality value, and small caps, which should “benefit disproportionately” as financing conditions ease.
Meanwhile, Goldman Sachs’ chief global equity strategist, Mueller-Glissmann, and his team have identified three potential ‘bears’ that could disrupt this equilibrium.
A growth shock, which could result from increased unemployment or disappointments in AI. Secondly, a rate shock, in case the Federal Reserve doesn’t implement further rate cuts. Lastly, a new dollar bear, leading to a 10% devaluation of the dollar, could deter foreign investors from the U.S. market.
See Also: How to Trade Futures
Upcoming Economic Data
Here’s what investors will be keeping an eye on Tuesday;
Federal Reserve Vice Chair Philip Jefferson will speak at 6:00 a.m., and Chicago Fed President Austan Goolsbee will speak at 1:30 p.m. ET.
July’s S&P Case-Shiller home price index for 20 cities will be out by 9:00 a.m., and September’s Chicago Business Barometer (PMI) will be released at 9:45 a.m. Meanwhile, August’s job openings and September’s consumer confidence data will be announced by 10:00 a.m. ET.
Stocks In Focus
Lamb Weston Holdings Inc. (NYSE:LW) was up 0.16% in premarket on Tuesday ahead of its earnings report scheduled to be released before the opening bell. Analysts estimate earnings of 55 cents per share on revenue of $1.62 billion.
Paychex Inc. (NASDAQ:PAYX) was 0.10% below the flatline as analysts estimate earnings of $1.21 per share on revenue of $1.54 billion before the opening bell.
Nike Inc. (NYSE:NKE) was 0.20% higher ahead of its earnings report scheduled to be released after the closing bell. Analysts estimate earnings of 27 cents per share on revenue of $11.00 billion.
Progress Software Corp. (NASDAQ:PRGS) rose 3.80% after reporting better-than-expected financial results for the third quarter. It raised its full-year 2025 revenue guidance to a range of $975 million to $981 million, versus estimates of $967.24 million.
Vail Resorts Inc. (NYSE:MTN) dropped 1.86% after posting downbeat results for the fourth quarter after the closing bell on Monday.
Rocket Lab Corp. (NASDAQ:RKLB) rose 1.06% as the company announced a multi-launch contract with Synspective.
Wolfspeed Inc. (NYSE:WOLF) surged 45.70% as it successfully emerged from Chapter 11 bankruptcy protection, completing its financial restructuring.
Cigna Group (NYSE:CI) advanced 4.24% as the health care system provider, Sarasota Memorial reached an agreement with the Connecticut-based insurer.
Commodities, Gold, And Global Equity Markets
Crude oil futures were trading lower in the early New York session by 0.99% to hover around $62.80 per barrel.
Gold Spot US Dollar rose 0.76% to hover around $3,804.93 per ounce. Its last record high stood at $3,871.72 per ounce. The U.S. Dollar Index spot was 0.16% lower at the 97.7450 level.
Asian markets closed mixed on Tuesday, as Japan’s Nikkei 225, Australia’s ASX 200, and South Korea’s Kospi indices fell. Whereas, Hong Kong’s Hang Seng, China’s CSI 300, and India’s S&P BSE Sensex indices rose. European markets were also mixed in early trade.
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