Morning in New York: deficit amid shutdown statistics will determine the trading vector

Daily review and forecast of events on the U.S. stock market from Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research.

On Tuesday, October 7, the FRB New York survey data on inflation expectations in the horizon of a year, three and five years, as well as on income, employment and credit availability will be released. We do not forecast inflation expectations to strengthen, believing that their dynamics will not complicate the Fed's task when making a decision on the rate at the meeting in late October. The market lays in the forecasts the continuation of easing of monetary conditions. At the same time, due to the ongoing shutdown, the volume of incoming macroeconomic information is limited.

Donald Trump opened the door to negotiations with Democrats on health care subsidies, which could be a step toward breaking the budget impasse. Then the head of the White House, however, said that the dialog will begin only after the reopening of the government. The Senate again rejected the temporary funding bill.

The debt market will hold an auction of three-year Treasury bonds on October 7, which will be an indicator of investors' interest in the treasuries. As before, special attention will be paid to the share of demand of foreign participants. We do not expect any negative surprises in this regard.

Presidents of FRB Atlanta and Minneapolis Rafael Bostic and Neel Kashkari, as well as members of the Board of Governors Michelle Bowman and Stephen Miran will make comments. Their assessments of the sustainability of inflation and guidance on the pace of future rate cuts will be important for traders.

The investor days will be held by Dell Technologies (DELL) and Autodesk (ADSK). In addition, the market is waiting for the announced Tesla (TSLA) event, where, according to media reports, a budget version of Model Y may be presented.

Futures on US indices show about zero dynamics. We assess the balance of risks as neutral with moderate volatility. We focus on S&P 500 fluctuations in the range of 6700-6775 points (from -0.6% to +0.5% to the previous session's closing level).

- Quotes of Trilogy Metals (TMQ) soared more than 200% on the news of the White House's plans to acquire 10% of the company and the approval of the Ambler Road project in Alaska. The $35.6 million investment is aimed at developing copper, cobalt and germanium mining, which fits into the U.S. strategy to reduce dependence on China for critical minerals.

- Constellation Brands (STZ) shares are adding about 3% in extended trading following the release of its quarterly report. The company beat analysts' expectations for earnings and revenue ($3.63 per share and $2.48 billion, respectively), but reiterated a lowered full-year forecast due to weaker consumer demand.

- Aehr Test Systems (AEHR) shares sagged after the company released results for the first quarter of fiscal 2026. The company's revenue fell 16% YoY to $11 million, slightly underperforming the consensus. Earnings per share came in at $0.01, slightly above average expectations.

October 6 trading on the U.S. stock exchanges ended predominantly with growth. The S&P 500 (+0.36%), Nasdaq 100 (+0.78%) and Russell 2000 (+0.41%) updated historical highs, only Dow Jones lost 0.14%.

Most shares of the "Magnificent Seven" traded in the plus. Tesla (TSLA: +5.4%) was the most notable riser. The key positive driver for the IT sector, which became the leader of growth (XLK: +1.01%), was the news of a multi-billion dollar partnership between AMD (AMD) and OpenAI. The real estate sector (XLRE: -1%) was the outsider.

There were no significant macroeconomic publications during the day. In the center of investors' attention remains the shutdown, continuing for the second week with no visible signs of compromise. The protracted crisis creates a double effect. On the one hand, the lack of economic data strengthens expectations of a soft Fed policy, supporting technology stocks, on the other hand, political uncertainty stimulates demand for protective assets. Gold, which is breaking historical records, is seen as an increasingly safe-haven asset compared to the US dollar. Also the situation on the commodity markets influenced the course of trading on Monday. WTI crude oil rose by 1.3% as OPEC+ expanded production limits by less than forecasted.

- Shares of chip maker Advanced Micro Devices (AMD: +23.7%) soared after announcing a multi-billion dollar partnership with OpenAI to build data centers. As part of the deal, OpenAI will receive warrants to purchase up to 10% of AMD stock.

- AppLovin's (APP: -14.1%) shares slipped noticeably amid Bloomberg reports of an SEC investigation into its data collection practices.

- Verizon (VZ: -5.1%) CEO Hans Westberg has stepped down, to be succeeded by ex-PayPal CEO Dan Shulman.

- Quotes of Tesla (TSLA: +5.4%) are growing on expectations of the event scheduled for Tuesday. The market is actively discussing the possibility of presentation of the long-awaited simplified version of Model Y costing less than $30 thousand in the base variant. Its appearance would allow Tesla to strengthen its position in the mass market of electric cars. There are also rumors circulating in social networks about a possible announcement of Musk's cooperation with Archer Aviation (ACHR: +17.9%).

This article was AI-translated and verified by a human editor