Morning in New York: market hopes for compromise to avoid shutdown

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

The key driver for today's session remains the risk of a partial shutdown of the federal government from the first of October and talks between congressional leaders and President Donald Trump at the White House. In the talks, Republicans are pushing a short-term resolution through Nov. 21, while Democrats are tying support to repealing recent healthcare cuts and extending ACA subsidies. Passage of the temporary measure in the Senate will require a fraction of Democratic votes, keeping the market sensitive to headlines about progress or derailment of the deal and creating heightened tactical volatility near the deadline.

The meeting between Trump and Israeli Prime Minister Benjamin Netanyahu at the White House, where the two sides will discuss the framework of an agreement on Gaza and the Middle East settlement in general, could cause intraday volatility in safe haven assets, energy stocks and defense stories. The parties' rhetoric following recent decisions by European allies to recognize Palestinian statehood will remain a key marker in assessing the risk of escalation.

In the macroeconomic calendar, investors' attention will be focused on the housing market, for which the statistics on pending transactions will be published. Also in the spotlight will be comments from Fed Governor Christopher Waller, New York FRB President John Williams and official Robert Perley. The market will be looking for signals on further rate trajectory, assessment of inflation risks and financial conditions after neutral PCE data.

Carnival (CCL) will report before the market opens, with Progress Software (PRGS), Jefferies (JEF) and Vail Resorts (MTN) reporting results after the close.

Futures on US indices show positive dynamics. We assess the balance of risks as neutral with moderate volatility. We focus on S&P 500 fluctuations in the range of 6600-6700 points (from -0.7% to +0.8% of the previous session's closing level).

- OPEC+ is considering a November production hike of at least 137,000 bpd amid prices above $70 and capacity constraints in some members.

-Lufthansa (LHA.EU) will cut 4,000 administrative positions by 2030. The company raised adjusted EBIT margin forecasts to 8-10% from 2028 and targets adjusted FCF above $2.9 billion per year, with plans to add 230+ aircraft.

- The US regulator has announced a recall of 123,000 vehicles due to the risk of window lining delamination, with Stellantis (STLA) having previously announced a similar recall.

- The U.S. Navy's largest contract at nearly $11 billion strengthens Lockheed Martin's (LMT) portfolio through Sikorsky and supports moderately positive premarket expectations for the stock.

- President Donald Trump has called for the firing of Microsoft 's (MSFT) global communications chief Lisa Monaco.

- SEC Chairman Paul Atkins has promised to accelerate Trump's initiative to scrap quarterly reporting. No timeline has been outlined, with investors warning of risks of reduced transparency and increased volatility.

September 26 trading on U.S. markets closed in the plus: Dow Jones added 0.65%, S&P 500 rose 0.59%, Nasdaq 100 added 0.44%, Russell 2000 rose 0.97%. Market breadth was positive, with all sectors closing in positive territory and utilities (XLU: +1.63%) leading the gains. The Magnificent Seven were dominated by positivity; Tesla (TSLA: +4.02%) added the most, while Apple (AAPL: -0.55%) and Meta (META: -0.69%) remained under pressure.

The main factors that influenced the session were "soft" PCE inflation data: +0.2% m/m and 2.9% y/y with no signs of acceleration, indicating stable consumption with stable core inflation. For the market, this signaled the absence of a new inflationary impulse and an argument in favor of a cautious trajectory of Fed policy easing in the future, which supported the shares of rate-sensitive segments.

The administration announced spot duties starting October 1 on heavy trucks, certain categories of furniture and pharmaceuticals. With regard to the EU on pharmaceuticals, the level of 15% was retained instead of the previously discussed 100%. The market perceived this as support for companies with a high share of production in the US and counter pressure on import-dependent supply chains and retail.

The final estimate of the September University of Michigan index is 55.1, down from the preliminary estimates and August levels. Inflation expectations for one year decreased to 4.7% from 4.8% a month earlier, and for five years - rose to 3.7% from August's 3.5%, which signals a softening of short-term inflationary pressures while long-term risks remain.

- Electronic Arts (EA: +14.9%) shares rose amid reports of a possible $50 billion buyout of the company, with Silver Lake and Saudi PIF among the possible partners, reinforcing expectations of a premium.

- Following the announcement of a 25% tariff on heavy truck imports, interest intensified in PACCAR (PCAR: +5.2%), where local production is improving against importers.

- On the announcement of a 30% tariff on upholstered furniture, pressure rose in the premium segment, which was reflected in Restoration Hardware (RH: -4.2%) on a risk-on basis for margins.

- Boeing (BA: +3.6%) was supported in light of reports of a partial return of control over safety inspections while relaxing FAA requirements due to reduced operational risks.

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