Wall Street is anticipating a positive start to the week for US stocks, building on the momentum of Friday’s record-breaking Dow Jones close. Upbeat investor sentiment is largely driven by several key factors, setting the stage for a potentially bullish week.
One major catalyst is the positive reception to Scott Bessent, President-elect Trump’s nominee for Treasury Secretary. Bessent, a prominent hedge fund manager, has indicated his intention to make Trump’s first-term tax cuts permanent. Furthermore, he’s pledged to eliminate taxes on tips, Social Security benefits, and overtime pay—promises that resonate strongly with investors and align with the President-elect’s campaign commitments. This proactive stance on tax policy is injecting confidence into the market.
While expectations of a further 25 basis point rate cut by the Federal Reserve in December have moderated (falling to 56% from 75% a month ago, according to CME Group’s FedWatch tool), the overall market sentiment remains optimistic. Pre-market trading on Monday already showcased this positivity, with the SPDR S&P 500 ETF Trust (SPY) up 0.54% to $598.72 and the Invesco QQQ ETF (QQQ) rising 0.64% to $509.01. This upward trend reflects the continuing bullish sentiment.
Last week’s performance further solidified this positive outlook. Major indices experienced significant gains: the Dow climbed approximately 2%, the S&P 500 added around 1.7%, and the tech-heavy Nasdaq registered a nearly 1.6% increase, despite some volatility stemming from Nvidia Corp.’s earnings announcement. Positive economic data also contributed to this upturn. The S&P Global US Services PMI rose to 57 in November (from 55 the previous month), and the manufacturing PMI increased to 48.8 from 48.5. While the University of Michigan consumer sentiment index dipped slightly to 71.8, the overall economic indicators painted a largely positive picture.
The positive market sentiment is not just anecdotal; prominent analysts are echoing this bullish outlook. Wells Fargo analysts, for instance, anticipate further cooling in food inflation, albeit at a slower pace than witnessed in the last two years. Ryan Detrick, chief market strategist at Carson Group, remains strongly bullish, citing healthy advance/decline lines as a key indicator of a robust bull market. He argues that historically, instances where the S&P 500 gains 20% for two consecutive years are followed by further growth, rather than corrections. Nathan Peterson, Director of Derivatives Analysis at the Schwab Center for Financial Research, further supports this perspective, highlighting bullish seasonality, favorable technicals, strong fundamentals, and a supportive Fed as reasons for his optimistic outlook for the coming week. He acknowledges, however, that the shorter trading window due to Thanksgiving might lead to higher volatility despite potentially lower volume.
This week’s economic calendar includes several key releases, including the S&P Case-Shiller home price index, consumer confidence data, new home sales figures, the minutes from the Fed’s November FOMC meeting, initial jobless claims, and GDP revisions. These data points will be closely monitored, though no major reports are scheduled for Monday, Thursday, or Friday.
Several individual stocks are also attracting attention. MicroStrategy (MSTR), Super Micro Computer (SMCI), Snowflake (SNOW), Palantir Technologies (PLTR), and Robinhood Markets (HOOD) all experienced pre-market gains, fueled by various factors including positive analyst upgrades and company announcements. Investors are also keenly awaiting earnings reports from companies such as Bath & Body Works, Agilent Technologies, and Zoom Video Communications.
In the commodities markets, crude oil futures saw a slight dip, while the 10-year Treasury note yield eased. Asian markets showed mixed results, while European markets trended upward in early trading. The overall picture remains one of cautious optimism, with the confluence of positive investor sentiment, strong economic indicators, and bullish analyst predictions pointing towards a potentially strong week for US stocks.
