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U.S. stock futures were trading higher on Monday in premarket hours after the tech-heavy Nasdaq 100 index extended its relentless climb last week, setting new record highs and nearing the 22,000-point milestone. The futures of all four major indices were trading higher.
The 10-year and two-year Treasury notes yielded 4.38% and 4.23%, respectively. The Federal Reserve’s upcoming meeting this week is highly anticipated by market observers.
The Federal Open Market Committee is widely expected to announce another interest rate reduction at the conclusion of their meeting on Wednesday. The probability of a further 25 basis point rate cut in December rose to 97.1% versus 61.9% a month ago, according to CME Group’s FedWatch tool.
If the Fed cuts rates, it would be the third consecutive cut, bringing the federal funds rate down from its current level of 4.50% to 4.75%. Following the meeting, Chairman Jerome Powell‘s remarks will be closely scrutinized by market participants.
Investors will receive another critical economic data point on Friday with the release of the November personal consumption expenditures (PCE) inflation index. This release follows other inflation indicators that suggest price increases accelerated in November.
Prior to that, GDP revisions on Thursday will reveal whether the economy maintained the previously estimated 2.8% growth rate for the third quarter.
| Futures | Change (+/-) |
| Nasdaq 100 | 0.31% |
| S&P 500 | 0.20% |
| Dow Jones | 0.10% |
| Russell 2000 | 0.27% |
In premarket trading on Monday, the SPDR S&P 500 ETF Trust (NYSE:SPY) was up 0.20% to $605.44 and the Invesco QQQ Trust ETF (NASDAQ:QQQ) rose 0.32% to $532.25, according to Benzinga Pro data.
Cues From The Last Session
The Nasdaq 100 rally was driven by tech giants and AI optimism. It’s set to double since the start of 2023, with five of the “Magnificent Seven” stocks hitting record highs. Broadcom Inc. joined the $1 trillion market cap club after strong earnings.
The Dow Jones Industrial Average, on the other hand, fell for the seventh consecutive day on Friday and S&P 500 index closed marginally lower.
Inflation data released during the week raised some red flags. Consumer inflation rose 2.7% year-over-year in November, in line with expectations, but producer inflation jumped to 3% year-over-year, exceeding estimates of 2.6%. This marked the sharpest increase since February 2023, raising concerns about potential cost pass-throughs to consumers.
| Index | Performance (+/-) | Value |
| Nasdaq Composite | 0.12% | 19,926.72 |
| S&P 500 | -0.002% | 6,051.09 |
| Dow Jones | -0.20% | 43,828.06 |
| Russell 2000 | -0.60% | 2,34.90 |
Insights From Analysts
Talking about the possibility of a “Santa Rally,” by the end of December the chief market strategist at Carson Group, Ryan Detrick shared a chart titled ‘Santa Comes Later In December’ showing how the market has picked up after Dec. 16, on an average from 1950 to 2023.
He said, “Weak breadth, inflation heating up, bears saying they are sorry, etc, have all been listed as reasons for the recent weakness. Or maybe it is perfectly normal for stocks not to do much the first half of December, before an end-of-year rally?”
He further made a case for a year-end rally in another X post. He shared a chart that compared high-yield bonds with U.S. Treasury bonds and high-beta stocks with low volatility stocks. “High yield and high beta are outperforming bonds and low volatility,” he said.
Tom Lee, the managing partner and head of research at Fundstrat Global Advisors, hosted a webinar outlining his 2025 outlook. According to him, the S&P 500 will have a better first half of the year getting up to 7,000, followed by a weaker second half of the year with us ultimately ending at 6,600
“To us, the downside risks are: DOGE too effective and GDP falls on spending cuts, (if) tariffs are actually implemented and GDP impacted,” Lee said.
Upcoming Economic Data:
Important data is slated to be released this week that will help investors determine the future course of action.
Stocks In Focus:
Commodities, Bonds And Global Equity Markets:
Crude oil futures were declining in the early New York session by 1.43% to hover around $70.27 per barrel.
The gold spot index rose by 0.08% to $2,677.91 per ounce. The Dollar Index was down 0.09% to 106.912 level.
Asian markets declined on Monday including Australia’s ASX 200, Hong Kong’s Hang Seng, China’s CSI 300, Japan’s Nikkei 225, India’s S&P BSE Sensex, and South Korea’s Kospi Index. Most European markets also fell except Spain’s IBEX 35.
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