US pre-open: S&P 500 to rise from five-month low ahead of busy week

(Sharecast News) - US stock futures were on the rise on Monday as the S&P 500 looks set to bounce off a five-month low ahead of a busy week for corporate earnings, economic data and central bank meetings. Stocks have been under heavy selling pressure over recent weeks on the back of rising bond yields, Middle Eastern geopolitical uncertainty and mixed corporate earnings, with the S&P 500 down 5% over the past 10 trading sessions.

Despite an escalation of conflict in Israel over the weekend - with government forces mounting a ground assault on Gaza - futures on Monday morning were higher as investors went bargain-hunting following the S&P 500 lowest close since late-May at 4,137.23. The index was up 0.6% in pre-market trade, while the Dow Jones Industrial Average gained 0.5% and the Nasdaq rose 0.7%.

After weeks of speculation, Israel's ground invasion into Gaza has begun, drawing condemnation from the international community. However, reports of military action being more cautious than initially predicted may have tempered the market's reaction to the news on Monday.

"Nonetheless, there is growing concern about the possibility of financial conditions over-tightening amid heightened risk aversion driven by geopolitical factors. The intersection of these two dynamics could have significant implications for financial markets and global stability," said Stephen Innes, managing partner at SPI Asset Management.

Back to the US, the economic data calendar for Monday looks relatively light; though things will pick up in the coming days with the ADP employment report, ISM manufacturing data and non-farm payrolls figures - not to mention central bank policy decisions from the Federal Reserve, Bank of England and Bank of Japan.

"The market is currently pricing in a probability of over 90% that the Fed will keep interest rates unchanged. Therefore, the primary focus will shift to the messaging from the Fed, especially considering the mixed signals that have been coming from the central bank since the September meeting," said market expert Patrick Munnelly from Tickmill Group.

He said that, according to the CME's FedWatch tool, there's a one-in-five chance that interest rates will rise by 25 basis points at the following meeting in December.

"The market will closely scrutinise the Fed's views on how elevated Treasury yields might impact its future policy decisions. Clarity on the central bank's approach to managing the current economic environment will be of significant interest to market participants," Munnelly said.

In company news, McDonald's, SoFi Technologies and Western Digital are on the agenda to report earnings before the opening bell, while Pinterest, VF Corporation and Transocean will publish results after markets close. Apple will also be in focus ahead of its results on Thursday.