December S&P 500 E-Mini futures (ESZ26) are up +0.69%, and December Nasdaq 100 E-Mini futures (NQZ26) are up +1.09% this morning as risk appetite improved amid a continued drop in oil prices and growing optimism ahead of a summit between U.S. President Donald Trump and Chinese leader Xi Jinping.
The price of WTI crude fell over -2% on Monday, extending its decline to a fourth straight session as improving traffic through the Strait of Hormuz and hopes for fresh diplomatic efforts to resolve the Iran war eased immediate supply concerns. Admiral Brad Cooper, head of U.S. Central Command, said on Saturday that oil and liquefied natural gas flows through Hormuz climbed to a six-month high over the past two weeks. Meanwhile, President Trump told Fox News that he would “probably” be open to meeting Iranian President Masoud Pezeshkian on the sidelines of the UN General Assembly this week.
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The drop in oil prices tempered inflation concerns, pushing Treasury yields lower. The 10-year T-note yield fell four basis points to 4.96%.
Adding to the upbeat mood, U.S. and Chinese officials gave positive assessments of their weekend talks on AI, trade, and investment ahead of the Trump-Xi summit. The two sides met in New York on Sunday, with the talks led by Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng. Mr. Bessent called the talks “very successful,” while China characterized the discussions as positive.
In Friday’s trading session, Wall Street’s major equity averages ended mostly higher, supported by strength in chipmakers and a drop in oil prices. Chip and AI infrastructure stocks climbed, with Sandisk (SNDK) surging about +11% and Lam Research (LRCX) gaining nearly +7%. Also, cryptocurrency-exposed stocks rallied after Bitcoin topped the $81,000 level, with Strategy (MSTR) jumping over +16% to lead gainers in the Nasdaq 100 and Coinbase Global (COIN) rising more than +11% to lead gainers in the S&P 500. In addition, MACOM Technology Solutions (MTSI) advanced over +4% after BMO Capital upgraded the stock to Outperform from Market Perform with a price target of $335. On the bearish side, Netflix (NFLX) fell more than -4% after Wells Fargo downgraded the stock to Underweight from Equal Weight with a price target of $57.
Economic data released on Friday were seen as negative for equities. U.S. manufacturing production unexpectedly fell -0.3% m/m in August, weaker than expectations of +0.3% m/m, while industrial production was unchanged m/m, weaker than expectations of +0.3% m/m. Also, the Conference Board Leading Economic Index for the U.S. unexpectedly fell -0.1% m/m in August, weaker than expectations of +0.1% m/m.
“The broad-based decline in manufacturing output in August suggests the factory sector may be on a weaker footing than we had previously thought, particularly as this does not capture the latest rise in oil prices. But with the timelier surveys still largely positive, it would be premature to sound the alarm just yet,” said Thomas Ryan at Capital Economics.
U.S. President Donald Trump’s meeting with Chinese leader Xi Jinping will be the main event this week. Trump is set to host Xi at the White House on Thursday for a reciprocal visit following their May summit in Beijing. Everything from trade to AI controls is expected to be on the agenda. Trump said on Friday that he expected to secure “a lot of” deals with Xi.
Market watchers will also closely follow comments from Fed officials for clues on future interest-rate moves after the U.S. central bank delivered its first rate hike in three years last week. Kansas City Fed President Jeff Schmid said on Friday that he supported the decision as a necessary step to curb elevated inflation that is being fueled by more than just higher oil prices. Echoing that concern, Minneapolis Fed President Neel Kashkari said in an interview on Fox News’ Sunday Morning Futures that inflation remains too high and that price pressures have spread beyond the oil-price shock stemming from the Iran war. A packed slate of Fed speakers this week includes Vice Chair Philip Jefferson, Chicago Fed President Austan Goolsbee, New York Fed President John Williams, Richmond Fed President Tom Barkin, Fed Governor Michael Barr, Cleveland Fed President Beth Hammack, and Philadelphia Fed President Anna Paulson.
Meanwhile, U.S. rate futures have priced in a 53.1% probability of a 25-basis-point rate hike and a 46.9% chance of no rate change at the next FOMC meeting in October.
In addition, market participants will keep an eye on U.S. economic data this week. Preliminary U.S. September purchasing managers’ surveys for manufacturing and services will be the main highlight, giving investors a snapshot of the health of the U.S. economy and insight into inflationary pressures stemming from the surge in energy prices caused by the Middle East conflict. U.S. durable goods orders data for August will also attract attention, providing clues about the pace of business investment. Other noteworthy data releases include the Richmond Fed manufacturing index, initial jobless claims, new home sales, and the University of Michigan’s consumer sentiment index.
On the earnings front, membership warehouse operator Costco Wholesale (COST), corporate-uniform provider Cintas (CTAS), payroll and human-resources services firm Paychex (PAYX), and auto parts retailer AutoZone (AZO) are the major names set to report their quarterly results this week.
Elsewhere, Meta Platforms (META) will host its Connect event this week, with announcements expected on AI, smart glasses, and virtual and mixed reality.
The U.S. economic data slate is largely empty on Monday.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.96%, down -0.74%.
The Euro Stoxx 50 Index is up +1.28% this morning, kicking off the week on an upbeat note. Technology stocks led the advance on Monday, tracking gains among Asian peers and in Nasdaq 100 futures amid renewed enthusiasm for AI. Bank stocks also climbed, with Societe Generale (GLE.P.DX) rising over +2% after the lender raised its profitability target. In addition, travel stocks advanced as lower oil prices improved the sector’s earnings outlook. Meanwhile, Eurozone government bond yields slumped on Monday as oil prices fell for a fourth straight session, easing concerns about the inflationary impact of elevated energy costs. This week, investors will closely watch the preliminary Eurozone PMIs for September for signs of how the recent surge in oil prices is affecting economic activity. Germany’s Ifo Business Climate Index for September will also be in focus. In addition, the Swiss National Bank, Sweden’s Riksbank, and Norway’s Norges Bank will announce their interest-rate decisions this week. The SNB and the Riksbank are widely expected to leave interest rates unchanged at 0% and 1.75%, respectively, while economists are divided over Norges Bank’s decision, with some forecasting a quarter-point rate hike and others expecting rates to remain steady at 4.25%. In other corporate news, Lotus Bakeries (LOTB.BB) climbed over +6% after Jefferies initiated coverage of the stock with a Buy rating.
The European economic data slate is empty on Monday.
China’s Shanghai Composite Index (SHCOMP) closed up +0.97%, while Japan’s financial markets were closed for a national holiday.
China’s Shanghai Composite Index closed higher today as sentiment got a boost after the U.S. described weekend talks with China as “very successful” ahead of the summit between Presidents Donald Trump and Xi Jinping later this week. U.S. and Chinese officials met in New York on Sunday to discuss AI, trade, and investment, with the talks led by Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng. Bessent said the two sides agreed to establish a dialogue on AI aimed at building a common understanding of goals and threats, sending Chinese AI-related stocks higher. Broader optimism also supported other sectors, with real estate stocks leading the gains. Healthcare stocks advanced as well after Reuters reported that the U.S. is developing rules for pharmaceutical companies investing in China that would likely allow them to continue pursuing most licensing deals for Chinese drugs. Meanwhile, China left its benchmark lending rates unchanged for a 16th consecutive month on Sunday, as expected. The one-year loan prime rate remained at 3.00%, while the five-year LPR was held steady at 3.50%, according to the People’s Bank of China. In corporate news, Vobile Group climbed over +5% in Hong Kong after launching its Seebay AI content creation platform.
Japan’s Nikkei 225 Stock Index was closed today for the Respect for the Aged Day holiday. Japanese financial markets will remain shut through Wednesday. Markets will be closed on Wednesday for the Autumnal Equinox holiday, while Tuesday is observed as a Citizen’s Holiday under Japan’s Act on National Holidays, which designates any weekday falling between two national holidays as a public holiday.
Pre-Market U.S. Stock Movers
Chip and AI infrastructure stocks climbed in pre-market trading. Intel (INTC) was up about +6%, Arm Holdings (ARM) was up more than +4%, and Marvell Technology (MRVL) was up over +2%.
Cryptocurrency-exposed stocks gained in pre-market trading as Bitcoin topped the $84,000 level. Strategy (MSTR) was up over +5%, while Coinbase Global (COIN) and MARA Holdings (MARA) were up more than +4%.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Monday - September 21st
AIAI Holdings (AIAI).
On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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