Insights 
VT 
Dow Jones futures remain steady near 46,850 during European hours on Thursday. S&P 500 futures are around 6,800, while Nasdaq 100 futures see a slight increase of 0.03% to 25,350.
Federal Reserve Policy Expectations
Traders exercise caution ahead of Federal Reserve Chair Jerome Powell’s forthcoming speech. The indices had reached record levels previously, bolstered by strong technology stocks performance.
Recent FOMC meeting minutes indicate policymakers might lean toward a dovish policy later this year. The CME FedWatch Tool reports a 92.5% likelihood of a 25-basis-point Fed rate cut in October, with a 78% chance of another in December.
Fed members suggest policy easing might be appropriate by year-end. As the US government shutdown enters its ninth day, no progress is reported.
On Wednesday, the Dow Jones saw little change, while the S&P 500 rose 0.58% and the Nasdaq 100 gained 1.12%. Gains in AI megacaps and semiconductor stocks fueled the rally. AMD surged 11.4% and Nvidia went up 2.2% due to high computing demand.
The Dow Jones Industrial Average is composed of 30 widely traded US stocks and is price-weighted. Factors impacting the DJIA include company earnings, macroeconomic data, and Federal Reserve interest rates.
Market Holding Pattern
With futures trading flat, we are in a holding pattern ahead of Jerome Powell’s upcoming remarks. The market has already priced in a very high probability of a rate cut this month, with the CME FedWatch Tool showing over a 90% chance. This strong expectation is supported by the recent September 2025 Consumer Price Index report, which showed inflation cooling to 2.8% and giving the Fed more room to ease policy.
The Fed’s dovish lean is largely a response to a softening labor market, as we saw in last week’s jobs report which showed the economy added only 95,000 jobs, well below expectations. This slowdown makes the case for further rate cuts by year-end, but it also signals potential economic weakness. For derivative traders, this means positioning for the expected rate cut while using options to hedge against any surprisingly hawkish commentary from Powell that could shock the market.
The government shutdown, now in its ninth day, is a source of headline risk but is unlikely to alter the market’s main trajectory. Looking back at the extended shutdown in late 2018 and early 2019, we saw the S&P 500 actually gain more than 10% during that period of political uncertainty. Therefore, any market dips caused by shutdown news should be viewed as potential buying opportunities, especially given the supportive stance from the Federal Reserve.
Leadership within the market remains narrow, concentrated in the technology sector that has pushed the Nasdaq 100 to new records. With the CBOE Volatility Index (VIX) currently low around a reading of 14, there is a sense of complacency that could leave the market vulnerable to a sudden shift in sentiment. We should look for opportunities in call spreads on tech leaders like Nvidia while being cautious of the rally’s narrow base.
