Looking to the Futures

S&P 500 E-mini futures (/ES) staged a sharp recovery on Wednesday as investors digested the results of the U.S. midterm elections and a significant decline in crude oil prices. Futures initially faced selling pressure overnight following Democratic victories in both chambers of Congress but reversed course as markets began to look past the political uncertainty. The rally carried into the regular trading session, with the S&P 500 Index finishing approximately 1.6% higher as buying interest spread across multiple sectors. 

The Democratic sweep in Tuesday's midterm elections has fueled optimism that a divided government could help limit further fiscal expansion. This congressional gridlock may restrict additional government spending and tax cuts, potentially reducing concerns surrounding federal borrowing and growing budget deficits. This reduction could ease upward pressure on Treasury yields, creating a more favorable environment for equities. This optimism was not seen throughout though as the election results did initially raise concerns that increased regulatory scrutiny could slow the expansion of artificial intelligence infrastructure. 

Another significant catalyst was the sharp decline in crude oil prices, with December WTI futures (/CLZ26) plunging more than 8% to a four-week low. Oil prices faced pressure amid speculation that the Democratic takeover of Congress could accelerate efforts to end the ongoing U.S.-Iran conflict, while rising domestic production also weighed on prices. The decline helped ease inflation expectations and pushed Treasury yields lower, with the benchmark 10-year yield falling approximately 7.4 basis points to 4.888%.

Economic data released on Monday has also provided a tailwind for equities this week, with the October ADP employment report showing private-sector payrolls increased by 86,000, exceeding expectations of 67,000. Additionally, the U.S. trade deficit unexpectedly narrowed to $105 billion in September, providing a potential boost to 3rd quarter GDP. Lastly, the October ISM Services Index registered 54.5, slightly below expectations, although its Prices Paid component signaled some easing inflationary pressures as it declined to 73.0. This combination of resilient employment and moderating price pressures helped reinforce optimism surrounding the broader economic outlook. 

Strong corporate earnings have helped provide support to equities as well amid a recent slew of major results over the past week. With over half of the S&P 500 companies reporting so far, Bloomberg Intelligence has projected 3rd quarter earnings growth of 31% year-over-year and 84% of reporting companies exceeding expectations. 
 

S&P 500 E-mini futures (/ES) experienced a volatile trading session Wednesday, opening at 7,610.25 before declining to an intraday low of 7,490. Buyers subsequently stepped in, pushing prices to a session high of 7,746.25 before settling at 7,720.50. Despite the strong recovery, /ES remained below its 20- and 50-day moving averages which acted as intraday resistance. Price was able to reclaim and close above the 9-day SMA however, which could as a near-term support level moving forward along with the 100-day which sits below at 7,662.87. 

The 14-day Relative Strength Index (RSI) registered 49.77, indicating relatively neutral momentum as buyers attempt to regain control following the recent pullback. Volume increased from the past two sessions with 2,329,733 contracts traded on Wednesday. 

According to the Daily Hightower Report, /ES may find support at 7606.13 and 7419.94, with potential resistance at the 7862.37 and 7932.43 levels. 
 

9-Day SMA:                         7686.19

20-Day SMA:                       7741.28

50-Day SMA:                       7734.12

100-Day SMA:                     7662.87

200-Day SMA:                     7353.50

14-Day RSI:                         49.7744

50-Day Volume Avg:            2,329,733

Major economic reports, trading events, and news items that could potentially impact specific futures markets:

8:30 AM ET: Preliminary Productivity and Costs

8:30 AM ET: Weekly Jobless Claims

8:50 AM ET: Fed Speech: Cleveland Fed President Beth Hammack

New futures products are available to trade with a futures-approved account on all thinkorswim platforms: 

• Ripple (/XRP)
• Micro Ripple (/MXP)
• 100 OZ Silver (/SIC)
• 1 OZ Gold (/1OZ)
• Solana (/SOL)
• Micro Solana (/MSL)

Visit the Schwab.com Futures Markets page to explore the wide variety of futures contracts available for trading through Charles Schwab Futures and Forex LLC.