US stock index futures were largely stable, Tuesday, with crude oil prices remaining near their highest levels in six weeks, while investors awaited a group of major companies’ business results and the US Federal Reserve’s decision on interest rates during the current week.
It is widely expected that the Federal Reserve will keep interest rates unchanged on Wednesday, after raising them last month. However, the markets expect to raise them at least two additional times by mid-2027, in light of the continued rise in major inflation indicators, in conjunction with the ongoing war between the United States and Iran, according to Reuters.
“Although we do not expect a change in interest rates this week, we do not rule out raising them, even if we are not convinced of the urgency of this step,” said John Felice, head of Americas strategy at BNY.
He added: “We believe that maintaining credibility is extremely important for the Federal Reserve, and as its Chairman, Kevin Warsh, constantly reminds us, inflation has exceeded the target level for more than 60 consecutive months.”
Crude oil prices rose slightly on Tuesday, after declining in the previous session, while Brent crude approached its highest levels since late April.
By 05:17 a.m. EST, Dow Jones futures rose by 0.14 percent, or 70 points, and Standard & Poor's 500 futures rose by 0.05 percent, or 3.75 points, while Nasdaq 100 futures rose by 0.01 percent, or two points.
Shares of giant American companies and growth stocks recorded mixed performance. Tesla shares rose by about 1 percent in pre-market trading, after jumping by more than 5 percent during the previous session.
Meta Platforms shares stabilized, after the company raised the size of the largest capital increase through the issuance of shares in its history to $97.5 billion, to finance its expansion in the field of artificial intelligence.
On the other hand, Whirlpool shares fell by 8.8 percent, after the home appliance company announced a loss in the third quarter, and its revenues fell below analysts’ estimates.
Major companies, including Coca-Cola, Boeing, and PayPal, are scheduled to announce their business results before the markets open on Tuesday.
Investors are also awaiting the results of the giant cloud computing companies “Alphabet”, “Microsoft” and “Amazon” later in the week, searching for indications of the extent to which huge investments in artificial intelligence have succeeded in achieving actual growth.
Jefferies stock strategist, Jane Gibbons, said in a note that the growth in profits of the “Great Seven” companies may lag behind the rest of the Standard & Poor’s 500 index companies. The company expects the profits of the group, which includes the largest American technology companies, to grow by 21 percent, compared to 32 percent for the rest of the companies included in the index.
Artificial intelligence stocks have been under pressure this month, amid growing concerns about the difficulty of justifying debt-financed spending as borrowing costs rise.
However, investor sentiment improved somewhat during the previous session, after the artificial intelligence company Anthropic revealed that it had filed for public offering of its shares, in an important step towards a listing that may be a record, despite its disclosure of significant losses and safety concerns.
This development helped support the shares of chip manufacturers, after weeks of sharp declines, along with the shares of other companies expected to benefit from the expansion of the use of artificial intelligence, including photonic product companies and specialized cloud computing service providers, known as “NuCloud.”
In a separate context, investors are awaiting the US midterm elections scheduled for November 3, which will determine who will control Congress.
On Tuesday, German Chancellor Friedrich Merz called on the middle powers in Europe and Asia to build a strategic alliance in the fields of trade, technology and security, warning that the erosion of the existing global order threatens the common interests of these countries.
“We are on the cusp of a new geopolitical era,” Mertz said in a keynote speech he delivered at the ISIS-Youssef Ishak Institute in Singapore, the first stop of a week-long Asian tour that includes Japan and South Korea, according to Reuters.
He added: “Our freedom, sovereignty, security and prosperity are at stake,” calling for strengthening cooperation between the middle powers in Europe and Asia.
Mertz proposed concluding an inter-regional agreement with member states of the Comprehensive and Progressive Trans-Pacific Partnership Agreement, which includes 12 countries, including Japan, Britain, Canada and Singapore. He said that these countries, along with the European Union, represent “more than a third of global trade.”
The German Chancellor described the efforts to strengthen relations between Europe and Asia as “long-term and strategic in nature,” adding that they represent “one of our most important responses to the new era.”
Germany's policy towards China is "entering maturity"
Merz said that Germany's policy towards China is "entering a stage of maturity" and that it is in line with the directions of the European Union.
He warned against complete disengagement from China, describing this as a “mistake” that will not make Europe “safer or more prosperous.” Instead, he called for reducing “unhealthy and unilateral dependencies” in supply chains, technology and raw materials.
But he stressed the need to take measures to address imbalances in trade competition, saying that “addressing becomes necessary when competition is distorted by structural surplus production capacity or restrictions imposed on exports and market access.”
Last week, European Union ministers called for reaching agreements with Beijing to limit imports in sectors including chemicals and machinery, in an effort to address the trade deficit in goods, which exceeded one billion euros ($1.1 billion) per day.
