U.S. stock index futures showed little movement on Monday following the last-minute approval of a government funding bill that prevented a shutdown. Investors are closely analyzing the Federal Reserve’s new outlook on interest rate cuts for 2025, which suggests only two reductions instead of the previously expected four. This shift reflects a stronger economic outlook, alongside a cool inflation report that provided some reassurance to the markets. Major stocks like Qualcomm and Rumble experienced notable gains, while the S&P 500 has risen by over 24% this year. Furthermore, historical trends indicate that the final days of December are typically strong for the stock Market, hinting at the potential for a “Santa Claus Rally.”
By Medha Singh and Purvi Agarwal
U.S. Stock Futures Steady After Avoiding Government Shutdown
U.S. stock index futures remained subdued on Monday, following the passage of a last-minute government funding bill that avoided a potential shutdown. Investors are now closely analyzing the Federal Reserve’s recent forecast on interest-rate cuts for the upcoming year.
On Saturday, the United States Congress successfully passed spending legislation just minutes before funding expired, preventing disruptions in critical services ahead of the busy holiday travel season. Despite a strong Market rally since last November’s presidential election, Wall Street faced a setback this month. This was mainly due to the Federal Reserve’s revised outlook, which now predicts only two 25-basis-point rate reductions for 2025 compared to four cuts previously anticipated. Moreover, the Fed has increased its annual inflation forecast, signaling robust economic health.
Market analysts at Deutsche Bank noted, “Last week’s Fed meeting reinforces our expectation that the January meeting skip might lead to a prolonged pause in 2025.” However, a cooler-than-expected inflation report released on Friday has somewhat alleviated concerns over rate cuts, providing a boost to the three main U.S. stock indexes.
Looking ahead, money markets currently expect about two 25-basis-point rate reductions in 2025, bringing the benchmark rate to a range of 3.75% to 4.0%, a slight increase from earlier predictions. Economic data is also on the horizon, with a measure of consumer confidence for December scheduled to release at 10 a.m. ET today.
As of 07:04 a.m. ET, Dow E-minis were down 119 points or 0.27%, while S&P E-minis fell 3.75 points or 0.06%. On a positive note, Qualcomm’s shares rose by 2.5% in premarket trading after a jury ruled in its favor regarding licensing agreements with UK-based Arm Holdings.
Another noteworthy development was Rumble’s shares, which skyrocketed by 43.4% after the video-sharing platform announced a significant investment from a cryptocurrency firm. Meanwhile, Apple’s stock, recognized as the world’s most valuable company, inched up by 0.2%.
Looking ahead, U.S. stock markets are entering a historically strong phase known as the “Santa Claus Rally.” Historically, the last five trading days of December and the first two of the new year yield an average S&P 500 gain of 1.3%.
In terms of overall performance this year, the S&P 500 has surged by 24.3%, the Dow by 13.7%, and the Nasdaq has climbed by 30.4%.
Tags: U.S. stock Market, Federal Reserve, government funding bill, interest-rate cuts, economic forecast, Santa Claus Rally.
What does “Wall St futures choppy” mean?
When we say “Wall St futures choppy,” it means that the future prices of stocks are fluctuating a lot. This means that investors are uncertain and the Market is not moving in a steady direction.
Why are investors digesting the Fed’s rate cut view?
Investors are looking closely at the Federal Reserve’s thoughts on interest rates. A rate cut can affect borrowing costs, spending, and the overall economy. So, understanding the Fed’s view helps investors make better decisions about their money.
How does the Fed’s rate cut impact the stock Market?
When the Fed cuts rates, it usually makes borrowing cheaper. This can encourage spending and investing, which might lead to higher stock prices. However, if investors are worried about the economy, they may react differently, causing choppy trading.
What should investors do during choppy Market conditions?
During choppy markets, investors should stay calm and stick to their long-term strategy. It can help to do research, understand the Market trends, and avoid making impulsive decisions based on short-term movements.
Is it a good time to invest when the Market is choppy?
Investing during choppy conditions can be risky. It is important to assess your risk tolerance and investment goals. Sometimes, it may be better to wait for more stability before making big investment moves.
