U.S. Stock Futures Jump to Start a New Week

We have no economic reports ahead of the opening bell today, in honor of Columbus Day/Indigenous People’s Day (depending on the percentage of Italian Americans in your local population ;) ). Q3 earnings season doesn’t really get underway this week until tomorrow, when the first tranche of Big Banks report. These include JPMorgan JPM, Citigroup C and Wells Fargo WFC.

From that point on, we’ll become more and more earnings-focused, as we see earnings as the clear catalyst toward an increasingly volatile stock market moving forward. Another stronger-than-expected quarter would be good for the markets. And as long as the federal government remains shut, Q3 earnings will be our clearest window into the domestic economy of the recent past.

Pre-market futures are climbing this morning, filling in some of the deep holes dug Friday, following President Trump’s announcing of an escalation in the trade war between the U.S. and China. This was after building optimism earlier in the week which saw fresh closing highs in the major indexes. On Friday, the Dow dumped -1.9%, the S&P 500 was -2.7% and the Nasdaq -3.5%.

An hour before the opening bell to start a new trading week, the Dow is up +356 points, the S&P 500 +77 and the Nasdaq +429 points. The small-cap Russell 2000 is up +37 points at this hour. These levels don’t solve for Friday’s big sell-off quite yet, but it’s still early. Bond yields for the 10-year have shed about 1 basis point (bps) to 4.06%; the 2-year has trimmed to 3.53% this morning. Bond markets are closed today in observance of the bank holiday.

U.S. & China Trade Deals Farther Away Than Advertised

It was going to be another perceived feather in the cap for President Trump — a major new conciliation on the trade impasse between the U.S. and China. But a firmer hold on rare earth exports by China — rare earth metals are key components of many electronics products — led to Trump’s frustration boiling over, promising in a Truth Social post that he was going to raise tariffs on Chinese imports by +100%. 

These seems like an overreaction, and we know by now Trump operates on a less demure, more emotional level of governing than any U.S. president who preceded him. But markets — which had been climbing all the ladder rungs to new closing highs seemingly every day — took this as a palpable warning sign that all might not be well in paradise. And any additional tariffs on the +30% already slapped onto Chinese imports will only increase costs for American consumers.

NABE Private GDP Outlook Improves

The National Association of Business Economics (NABE) is out with its approximations for the U.S. economy for the remainder of this year and next. Seeing tariffs as less of an inflationary factor going forward, the forecast for U.S. GDP is +1.8% for 2025 — up half a point from  +1.3% in the previous report. This also rose 30 bps for 2026: from +1.4% in the last report to +1.7% today. 

Tariffs are still considered the biggest hindrance to this economy, according to the survey. At the same time, a steep drop in job additions accompanies this new report, in line with what we’ve seen fairly recently in employment numbers (which have been shuttered since the government shut down nearly two weeks ago). 

Core Personal Consumption Expenditures (PCE) for full-year 2025 is now +3.1% — again, within range of the trajectory of what we had seen from government numbers — and +2.5% for 2026, which is in-line with the Fed’s projections in its latest dot-plot. Non-residential investment this year (think AI infrastructure, etc.) is estimated to come in at +3.8%, demonstrating how the AI phenomenon continues to drive the economy.

Fastenal Misses Q3 Estimates

An early entrant into Q3 earnings this morning is industrial supply major Fastenal FAST, which missed estimates slightly on both top and bottom lines. Earnings of 29 cents per share were short of the Zacks consensus by a penny, while revenues of $2.17 billion in the quarter was just short of expectations by -0.11%. Shares are down -4% on the news; FAST shares have ridden higher by +27% year to date.

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This article originally published on Zacks Investment Research (zacks.com).

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