U.S. stocks could start the first trading session of the week on a mixed note, as traders fully bake in the odds of a rate cut by the Federal Reserve this week. Small-caps are outperforming in the premarket, as evidenced by the solid rise in the Russell 2,000 futures. Analysts and market watchers are polarized about the impact the widely anticipated rate cut can have on the market.

Some consolidation around the current levels could not be ruled out before the Fed’s interest-rate announcement, scheduled for Wednesday. While some call for broadening of the market rally, with tech stocks likely to add on to their gains, others draw cues from history, which shows that the market typically collapses after a rate cut. Regional manufacturing activity data could also impact the market direction of the day.

In premarket trading on Monday, the SPDR S&P 500 ETF Trust (NYSE: SPY edged down 0.02% to $561.77 and the Invesco QQQ ETF (NASDAQ: QQQ) edged down 0.24% to $474.19, according to Benzinga Pro data.

Cues From Last Week:

Wall Street rallied hard in the week ended Sept. 6, reversing from the previous week’s tech-led sell-off. Benign inflation data sealed the fate of the market, as the S&P 500 and the Nasdaq Composite indices rallied in all five sessions of the week, settling at the highest levels since late September. These averages recorded their best weekly gains for the year.

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Insights From Analysts:

After being down over 4% for the week in the week ended Sept. 6, the S&P 500 settled the next week 4%+ higher. While making note of the remarkable turnaround, Carson Group Chief Market Strategist Ryan Detrick said this bodes well for the future. When such a reversal has taken place in the past, the market was higher 81.8% of the time a year, with a median gain of 18.8%.

The lion’s shade of year-to-date gains may be behind us, he said, adding that “outside of a Black Swan event, there doesn’t appear to be any identifiable material downside risks.”

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Upcoming Economic Data:

The Federal Open Market Committee meeting will be front and center in the unfolding week, with the odds favoring a 50 basis-point cut over a 25 basis-point cut. The post-meeting policy statement, the Summary of Economic Projections, which also has the dot plot chart, and Chairman Jerome Powell’s press briefing could all be market-moving events.

This apart, traders get to digest the August retail sales report, the industrial production report and two regional manufacturing activity readings for September, and two housing market reports.

On Monday, the New York Federal Reserve is due to release the results of its Empire State manufacturing survey. The business activity index may have worsened from -4.7 in August to -5 in September, suggesting continued contraction.

The Treasury will auction three- and six-month notes at 11:30 a.m. EDT.

Stocks In Focus:

• Trump Media & Technology Group Corp. DJT rose over 3.5% in premarket trading following a second assassination attempt at the company’s owner and presidential candidate Donald Trump.
• Apple, Inc. AAPL moved down over 1.6% on views that preorders for the Pro series have been lower than expected.
• Intel Corporation INTC climbed over 3% on reports that the company has reached a $3.5 billion deal to supply chips to the U.S. military.

Commodities, Bonds And Global Equity Markets:

Crude oil and gold futures rose modestly and the benchmark 10-year Treasury note was little changed at 3.653% ahead of week’s Fed decision. Bitcoin BTC/USD pulled back to the $58.5K mark.

The major markets that were open in Asia ended higher for the day, reacting to Wall Street’s strong finish last Friday, although the New Zealand market pulled back as the nation’s central bank held rates unchanged and hinted at a delay in downward interest-rate adjustment amid sticky inflation. The Chinese, Japanese and South Korean markets remained closed for public holidays.

European stocks were modestly lower in early trading.

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