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Briefing.com Summary:
*The stock market is poised to recoup last week's loss when trading begins.
*Electronic Arts (EA) will be taken private in a $55 billion, or $210.00 per share, cash offer.
*The risk of a government shutdown is present, just not in the economy or the stock market.
The stock market had a losing week last week, but let's be honest, it wasn't much of a loss. The S&P 500 was down a mere 0.3% when it was all said and done. That loss looks as if it will be wiped away when the market opens today.
Currently, the S&P 500 futures are up 37 points and are trading 0.5% above fair value, the Nasdaq 100 futures are up 181 points and are trading 0.7% above fair value, and the Dow Jones Industrial Average futures are up 202 points and are trading 0.4% above fair value.
The buy-the-dip crowd is back in action, bolstered in part by the success of Friday's comeback effort following the August PCE report, a drop in Treasury yields, and some M&A activity that has featured a $55 billion, or $210.00 per share, cash offer by PIF, Silver Lake, and Affinity Partners to acquire Electronic Arts (EA) in a go-private transaction.
The latter is a 25% premium to EA's unaffected stock price on September 25 before news of a possible transaction broke.
Other notable news this morning includes a Bloomberg report that OPEC+ is considering at least a 137,000 barrel per day increase in its output in November, a Politico report that President Trump is going to meet leaders from both parties today ahead of a possible October 1 government shutdown, and a CNBC report covering Cleveland Fed President Hammack's (non-FOMC voter) concerns about inflation and view that it is a challenging time for monetary policy.
Ms. Hammack does not vote on the FOMC this year, but she does rotate into a voting position in 2026.
Notably, the fed funds futures market doesn't see much of a challenge in the Fed cutting rates again at its October meeting. The probability of another 25-basis-point cut to 3.75-4.00% is 89.3%, according to the CME FedWatch Tool, which also shows a 68.3% probability of a 25-basis-point cut to 3.50-3.75% at the December FOMC meeting.
Those probabilities are subject to change based in particular on the inflation and employment data ahead. Friday is supposed to feature the release of the September Employment Situation Report, yet that may not be the case if there is a government shutdown that interferes with the release schedule.
It is very much touch-and-go in terms of whether there will be a deal that averts a government shutdown, but for now the impact of a possible shutdown is concentrated more in the headlines than in the economy and the stock market. We can say as much with the Atlanta Fed's GDPNow model estimate projecting 3.9% real GDP growth in the third quarter and the stock market sitting near record high levels.
