U.S. stock futures dipped Wednesday as prices struggle to follow-through after a strong session Tuesday, driven by tech stocks and a decline in oil prices from their recent highs. Despite this positive momentum, the market could face further volatility, as October is historically the most turbulent month, especially with the U.S. presidential election just weeks away. Investors are also keenly awaiting the release of the latest Federal Reserve meeting minutes at 2 p.m. ET, which could provide further insights into the economic outlook and monetary policy direction.

On Wednesday, European markets experienced slight gains despite fluctuating positive sentiment, largely influenced by the volatility in Chinese markets. The mixed performance in Asia, especially the significant sell-off in Chinese stocks, led to a cautious mood among European investors. Nevertheless, certain sectors managed to post gains, with banks rising by 1.7% and oil and gas stocks adding 1.6%. Key events to watch in Europe today include the German government’s latest economic forecasts and the NATO defense ministers’ meeting in Belgium.

On Wednesday, Chinese stocks experienced a significant sell-off amid a volatile trading day across Asia-Pacific markets. The mainland CSI 300 index plummeted by 7.05%, ending a 10-day winning streak and closing at 3,955.98. Similarly, Hong Kong’s Hang Seng index dropped 1.7% in its final hour of trading. In contrast, Japan’s Nikkei 225 rose by 0.87% to 39,277.96, and the Topix index increased by 0.3%, closing at 2,707.24. Australia’s S&P/ASX 200 saw a modest gain of 0.13%, finishing at 8,187.4. Meanwhile, New Zealand’s central bank cut its policy rate by 50 basis points to 4.75%, whereas the Reserve Bank of India maintained its rate at 6.5%.

Economic Calendar

Earnings Calendar

Notable reports for Wednesday before the bell include HELE. After the bell reports include AZZ.

News & Technicals’

Boeing announced it has withdrawn its contract offer following a breakdown in negotiations with the machinist union. Over 32,000 Boeing machinists went on strike on September 13 after decisively rejecting a new contract proposal. The union stated that Boeing failed to offer wage increases and other improvements during the latest round of discussions, leading to the current impasse. This development marks a significant escalation in the labor dispute between Boeing and its machinists.

Starting Wednesday, Disneyland will increase the prices of its most popular tickets. While the base entry price will stay at $104, other ticket prices will rise by $7 to $12. Additionally, the cost of the Magic Key annual passes will see a hike of 6% to 20%, translating to an increase of $100 to $125 depending on the pass type. These adjustments reflect Disneyland’s ongoing efforts to manage demand and enhance the guest experience.

Late Tuesday, the Department of Justice announced it is contemplating a potential breakup of Google as an antitrust measure. The DOJ is evaluating both behavioral and structural remedies to prevent Google from leveraging products like Chrome, Play, and Android to favor its search engine. The judge has not yet ruled on these remedies, and Google is expected to appeal, which could prolong the legal process for years. This development marks a significant step in the ongoing scrutiny of Google’s market practices.

On Monday, a U.S. judge issued a permanent injunction requiring Google to provide alternatives to its Google Play store for downloading apps on Android phones. This ruling, delivered by Judge James Donato in a California court, represents the most significant outcome of Epic Games’ antitrust lawsuit against Google, which began in 2020. Additionally, Epic and Google will establish a three-person committee to review technical issues related to Google’s compliance with the injunction, according to the court filing.

Although very select stocks gave us an impression of a very bullish shift this morning, futures prove that the market remained locked in the consolidation range and struggle to follow through continues. The rising bond yields pushed mortgage rates higher triggering a sharp decline in applications this morning raising some uncertainty as we wait for the FOMC minutes. However, we are likely getting closer to big move in the market perhaps inspired by the Thursday CPI report or the big bank reports beginning Friday morning.  Buckle up for a possible explosion of volatility in the days ahead.

Trade Wisely,

Doug