U.S. stock futures traded higher in premarket hours Monday, following the Nasdaq 100’s record-breaking climb last week. Futures for all major indices—Nasdaq 100, S&P 500, Dow Jones, and Russell 2000—showed gains. Treasury yields remained steady, with the 10-year and 2-year notes at 4.38% and 4.23%, respectively. This week’s Federal Reserve meeting is a focal point, with a widely anticipated interest rate cut. The probability of another 25 basis point reduction in December has soared to 97.1%, a significant jump from 61.9% a month prior. A rate cut would mark the third consecutive reduction, lowering the federal funds rate to 4.75%. Chairman Jerome Powell’s post-meeting remarks will be closely analyzed. Friday’s release of the November Personal Consumption Expenditures (PCE) inflation index is another key data point to watch, especially given recent inflation indicators suggesting an acceleration in price increases. Thursday’s GDP revisions will reveal if the economy sustained its 2.8% growth rate for the third quarter. Pre-market trading saw the SPDR S&P 500 ETF Trust (SPY) up 0.20% and the Invesco QQQ Trust ETF (QQQ) up 0.32%.
The Nasdaq 100’s rally was fueled by tech giants and AI optimism. The index is poised to double since the start of 2023, with several “Magnificent Seven” stocks hitting record highs. Broadcom’s strong earnings propelled it into the $1 trillion market cap club. In contrast, the Dow Jones Industrial Average experienced its seventh consecutive day of decline, although it remains only 2.6% from its all-time high. Inflation data raised concerns, with consumer inflation rising 2.7% year-over-year in November (in line with expectations), but producer inflation unexpectedly jumping to 3%, exceeding estimates and marking its highest point since February 2023. This surge raises concerns about potential cost increases for consumers.
Analysts offer diverse perspectives on the market’s trajectory. Ryan Detrick of Carson Group suggests the possibility of a “Santa Rally” towards the end of December, citing historical market trends. He points to periods of weak breadth, rising inflation, and shifts in investor sentiment as potentially normal occurrences before year-end rallies. Tom Lee of Fundstrat Global Advisors presents a bullish outlook for 2025, projecting an S&P 500 peak of 7,000 in the first half, followed by a decline to 6,600 by year’s end, citing potential downside risks from factors like government spending cuts and tariffs.
This week’s economic calendar is packed with crucial data releases, including manufacturing surveys, retail sales figures, industrial production data, housing market indicators, and the Federal Open Market Committee (FOMC) meeting on Wednesday, which will include the interest rate decision and Chairman Powell’s press conference. Earnings reports from prominent companies, including Micron Technology, Lennar, General Mills, Toro, Accenture, Nike, Cintas, FedEx, Paychex, Carnival Corporation, and Winnebago Industries, are also expected. Several stocks experienced significant premarket movements, with some Nasdaq 100 additions and deletions affecting share prices. Commodity markets also showed movement, with crude oil futures declining and the gold spot index rising. Asian and European markets showed mixed performance, reflecting the broader global economic uncertainty.
