STLA Stellantis NV

U.S. futures are indicating a positive start, as markets anticipate that Federal Reserve policymakers will maintain current interest rates following a much-awaited policy-setting meeting starting on Tuesday. Additionally, Instacart shares are set to begin trading in New York after pricing its initial public offering (IPO) at the upper end of the target range. Meanwhile, the United Auto Workers (UAW) union is warning of further U.S. plant closures if negotiations with major car manufacturers remain stagnant.

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Adobe (NASDAQ:ADBE): DZ Bank AG Research maintains its buy recommendation with a target price of $600.

Amazon (NASDAQ:AMZN): Baptista Research upgrades to outperform from hold with a target price of $170.30.

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Micron Technology (NASDAQ:MU): Aletheia Capital Limited upgrades to buy from hold with a target price of $86.

Vulcan Materials (NYSE:VMC): Baptista Research upgrades to outperform from hold with a target price raised from $219 to $249.50.

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Keep An Eye Out: Pre-Market Movers Futures Rise Ahead of Fed Meeting

U.S. stock futures are trading above the flatline as investors look forward to the two-day Federal Reserve policy meeting commencing on Tuesday.

As of 05:22 ET, the Dow futures contract has gained 20 points or 0.1%, S&P futures have edged up by 3 points or 0.1%, and Nasdaq 100 futures are mostly unchanged.

On Monday, major Wall Street indices had positive sessions, boosted by a surge in oil prices, benefiting energy companies like ExxonMobil (NYSE:XOM) and Chevron (NYSE:CVX). Recent production cuts by Saudi Arabia and Russia have driven crude prices to multi-month highs.

However, chipmakers remain under pressure following reports that Taiwan’s TSMC has asked its main suppliers to delay the delivery of top-end manufacturing equipment. British semiconductor designer Arm (NASDAQ:ARM), which had a significant IPO last week, saw its shares drop 4.5% in New York due to broader economic uncertainty.

Focus on the Fed Meeting

The Federal Reserve is widely expected to keep interest rates unchanged after its meeting concludes on Wednesday. Markets are almost certain that borrowing costs will remain within the range of 5.25% to 5.50%, according to Investing.com’s Fed Rate Monitor Tool.

However, the Fed’s plans for the rest of 2023 remain somewhat uncertain. After this month, Fed officials have two more meetings this year to decide whether another rate hike is necessary to prevent a resurgence of cooling inflation.

Recent data showed that a surge in petrol prices drove a spike in consumer price growth in August to its fastest rate in 14 months, though the annual “core” reading, which excludes food and fuel, was the slowest in two years. These numbers solidified expectations that the Fed will refrain from resuming its tightening campaign in September.

Currently, there is less than a 40% chance of interest rates being raised again this year, according to the Fed Rate Monitor Tool. However, with indications of rising car and health insurance costs, along with potential increases in vehicle prices due to an ongoing auto workers strike, some economists see upward risks to inflation.

The Fed’s commentary on future price developments is likely to impact market reactions to this week’s meeting.

Instacart’s High IPO Pricing

Instacart (NASDAQ:CART) has priced its IPO at $30 per share, hitting the upper end of its revised target range, signaling renewed activity in the IPO market.

The San Francisco-based company raised $660 million by selling 22 million shares, and the shares will begin trading on the Nasdaq on Tuesday.

This IPO values Instacart at $9.9 billion on a fully diluted basis, a fraction of the $39 billion valuation it had during a pandemic-era boom in at-home food orders in March 2021.

Instacart’s IPO announcement reflects a revival in the IPO market, which had been subdued by economic uncertainties and higher interest rates. In addition to Instacart, Klaviyo, a marketing and data automation group, has also adjusted its IPO pricing range in anticipation of going public this week.

The strong demand for Arm’s IPO, with shares of the SoftBank-backed firm soaring well above their top-end pricing on their debut trading day last Thursday, has contributed to the positive sentiment.

UAW Warns of More U.S. Plant Strikes

The United Auto Workers (UAW) union has issued a warning that additional U.S. factories could go on strike if negotiations with major automakers Ford (NYSE:F), General Motors (NYSE:GM), and Stellantis (NYSE:STLA) do not make progress.

UAW President Shawn Fain stated in a video message on Monday that recent talks have been unproductive, and the union is not willing to allow the Detroit Three car companies to prolong the situation. The primary issues in negotiations are related to pay and employee benefits.

Fain added that more work stoppages could be announced on Friday. Existing walkouts at plants in Michigan, Ohio, and Missouri have already halted production of popular models like the Ford Bronco, Jeep Wrangler, and Chevrolet Colorado.

U.S. Treasury Secretary Janet Yellen noted that it is still too early to gauge the broader economic impact of the strikes, as it may depend on the duration of the labor actions.

Oil Continues to Rise

Oil prices have continued to rise, marking the fourth consecutive session of gains, fueled by recent supply concerns and a weak U.S. shale production forecast.

U.S. oil output from top shale-producing regions is on track to decline for a third consecutive month in October, reaching its lowest level since May 2023, according to the U.S. Energy Information Administration’s monthly drilling productivity report released on Monday.

These factors have added to concerns of a significant supply deficit this year, driven by extended production cuts by Saudi Arabia and Russia.

As of 05:23 ET, U.S. crude futures are up 0.8% at $91.28 a barrel, while the Brent contract has risen 0.5% to $94.92. Both benchmarks are trading near 10-month highs after gaining for three consecutive weeks.