US futures little changed amid latest geopolitical shock

US stock index futures opened little changed as investors weighed the market implications of the attack on Donald Trump that threatened to upend the US election.

Futures on the S&P 500 Index for September rose 0.1% at 06:04 p.m. in New York, while Nasdaq 100 contracts traded little changed. Early trading suggested little consternation, with the Cboe VIX July futures trading at 12.89, up from 12.83 at the close Friday.

Still, the attempted assassination of the former president threatened to shatter the calm that’s lately pushed the S&P 500 Index from one record to the next, forcing traders who have been focused on Federal Reserve policy and economic resiliency to consider political implications as they wade into summer trading. 

While traders generally don’t expect Trump’s assassination attempt to derail the stock market’s trajectory, a pick-up in near-term price swings is likely. They’ll also contend with the start of earnings season and fresh economic data that could help determine the Fed’s policy path.

While the Saturday shooting grabbed headlines in an already tumultuous political season investors are left assessing the attack’s impact on Trump’s chances to reclaim the presidency. Among the industries most likely to trade on his chances of re-eletion are prison operators, Bitcoin miners and firearms companies, traders said.

“The assassination attempt reminds investors there are always potential unknowns which can potentially affect markets,” said Stephen Solaka, co-founder of Belmont Capital Group. “If anything, it will create a floor on volatility moving forward, but how much of a rise, if any, will be a reflection of movement in the market.”

The Saturday shooting forced traders back to their keyboards on a weekend, and added a layer of uncertainty for anyone already weighing the prospect of interest-rate cuts in the world’s largest economy at the same time that equity valuations remain elevated relative to history. 

A Deutsche Bank AG gauge of equity exposure among rules-based and discretionary investors jumped to the 96th percentile of historical observations last week. From a contrarian standpoint, such optimism suggests little buying power in the future. 

“Equities will continue to be driven by earnings, not these events, at the index level,” said Michael Purves, chief executive officer at Tallbacken Capital Advisors. “That said, some stocks will get an added boost if Trump is perceived to be the winner in November.”

Initial market commentary suggested the shooting of Trump at a Saturday rally in Pennsylvania may prompt traders to boost his probability of success in November’s election.  

The shooting on Saturday sent shockwaves through the nation and spurred figures on both sides of the aisle to call for leaders to rise above the political fray and attempt to heal national divisions. President Joe Biden said he will deliver address from Oval Office on Sunday night. 

Besides political uncertainty, investors will remain focused on earnings season that’s ramping up in the US this week with reports from Netflix Inc., Johnson & Johnson and State Street Corp., among others.

“While this was a horrific event, equity futures are likely steady because investors remain very focused on Fed policy and the probability of interest-rate cuts still coming later this year,” said Yung-Yu Ma, chief investment officer at BMO Wealth Management.