U.S. Stock Index Futures Trend Up Ahead of Presidential Election

(Reuters) – Futures linked to U.S. stock indexes saw a slight increase on Monday, setting the stage for an eventful week in global markets as Americans prepare to elect a new president. The Federal Reserve is also expected to decide on further cuts to its benchmark policy rate.

A recent poll indicates Democratic candidate Kamala Harris leading in Iowa ahead of the Tuesday vote. This contrasts with increasing speculation regarding Republican candidate Donald Trump's chances, which have led to a rise in bond yields, the dollar, and bitcoin.

In premarket trading, stocks associated with Trump’s potential victory showed declines, while the 10-year Treasury yield's drop from recent highs alleviated some pressure on the broader market.

Trump Media & Technology Group experienced a 5% dip, and Phunware, known for developing apps for Trump's 2020 campaign, fell 8.9%.

Betting site PredictIT placed Harris at 53 cents compared to Trump's 51 cents, reflecting the amounts investors are willing to bet on candidates as potential winners, a shift from 42 cents and 61 cents just a week ago.

As of 5:25 a.m. ET, Dow E-minis gained 29 points (0.07%), S&P 500 E-minis rose by 11.5 points (0.2%), and Nasdaq 100 E-minis climbed 34.75 points (0.17%).

The winner of the presidential election might remain uncertain for days post-voting, leading to potential volatility in trading as investors await clarity on future policies.

The CBOE's VIX, a measure of expected equity volatility, was trading at 22.56, significantly above its 30-day moving average of 19.45, yet lower than the 34-41 range seen a week before the 2020 election.

"We are nearing the historical peak of the market, which suggests that the upside, regardless of the election outcome, will likely be limited," commented Sebastiano Chiodino, head of liability-driven investments at Generali Asset Management.

Additionally, investors are largely anticipating a 25 basis point interest rate cut by the Fed in the upcoming November meeting, with the decision expected on Thursday.

While Wall Street closed positively on Friday, all three major indexes experienced weekly declines due to mixed earnings reports from big tech firms, leading to losses among some major companies.

Chip giant Nvidia increased by 2.4% after being announced as a replacement for Intel in the Dow Jones Industrial Average, causing Intel shares to fall by 2.3%.

Investors are also looking forward to the release of September U.S. factory orders and earnings from firms like Constellation Energy and Marriott International (NASDAQ:MAR) before the market opens.