- There are key stock market catalysts on the horizon before November.
- The Fed's recent interest rate cut has reduced market uncertainty, for now.
There are a handful of key market catalysts that could jolt stock prices between now and November.
With the Federal Reserve's first interest rate cut since 2020 delivered last week, much uncertainty has been removed from the stock market — at least in the short term.
In a Monday note, Bank of America highlighted the most important days for the stock market between now and the November Presidential election.
The bank used options prices to map out the implied moves in the S&P 500 for every day between now and the day after the election.
November 6
Technically the day after the election, the most important day for the stock market is November 6, when markets can react to the results.
The bank estimates a 2.5% move in the S&P 500 on November 6 in either direction.
This will be a consequential day for investors because, assuming there is a decisive winner, markets will begin to price in which type of policies might be pursued during the four-year term of the 47th President of the United States.
The stock market experienced a similar-sized move on the day after the prior Presidential election, with the S&P 500 jumping 2.2% on November 4, 2020.
October 4 and November 1
Investors will have a close eye on the nonfarm payroll reports for the months of September and October, set to be released on October 4 and November 1, respectively.
The options market is pricing in just over a 1% move for the S&P 500 on those days, in either direction.
Bank of America said that solid jobs reports and PMI data could fuel a rally in stock prices.
"We believe good news is good news for equities and positive surprises in those two data should be tailwinds for stocks going forward," Bank of America said.
October 21
This date represents the estimated day some of the mega-cap tech companies will announce third-quarter earnings results.
Options prices show an implied move of 1% in either direction for the S&P 500.
"The big 3Q earnings week (Oct. 21-25) should also be a big catalyst for the market," Bank of America said.
Investors will be paying close attention to any updates on the monetization efforts of artificial intelligence technologies.
October 10
With the Fed shifting its attention to the labor market from inflation, the September CPI print is seen as having less of an impact on the stock market than the other data released.
Options pricing suggests a daily swing of just under 1% for the S&P 500 in either direction when the September CPI data is released on October 10.
"Prior to the first cut, inflation data were the most important data to watch. But now that the Fed has started its cutting cycle, we think labor market data (e.g. NFP) will be more important to watch than inflation," Bank of America said.