U.S. stock index futures edged higher on Monday as a last-minute government funding bill averted a shutdown, while optimism about cooling inflation started the holiday-shortened week on a positive note.
The U.S. Congress passed a last-minute spending bill on Saturday, just minutes after funding expired. This could have resulted in disruption to everything from law enforcement to national parks ahead of the busy Christmas travel season.
After a solid run since November’s presidential election, Wall Street suffered a setback this month, particularly after the Federal Reserve forecast just two 25-basis-point interest rate cuts in 2025 – as opposed to September’s four rate cuts – and raised its annual inflation forecast had, a sign that the world’s largest economy is in good shape.
“Last week’s Fed meeting confirmed our basic assumption that skipping rate cuts at the January meeting could lead to a longer pause in 2025,” Deutsche Bank economists said in a note.
However, a cooler-than-expected inflation report on Friday calmed concerns about interest rate cuts next year and helped the three major U.S. stock indexes rally.
Money markets are expecting two interest rate cuts of about 25 basis points in 2025, which would put the benchmark interest rate in a range of 3.75% to 4.0%, down from 3.50% to 3.75% two weeks ago.
As of 5:18 a.m., the Dow E-minis were up 31 points, or 0.07%, the S&P 500 E-minis were up 15.5 points, or 0.26%, and the Nasdaq 100 E-minis were up 97.75 points, or 0 .45% higher.
Qualcomm shares rose 3% in premarket trading after a jury found that Qualcomm’s central processors were properly licensed under an agreement with Britain’s Arm Holdings. Shares of Arm, which is seeking a new trial, fell 3.3%.
Shares of Rumble jumped 47.3% after the video platform announced it had received a $775 million strategic investment from cryptocurrency firm Tether.
Apple, the world’s most valuable company, rose 0.5%, in line with most megacap and growth companies, putting its market cap at just $115 billion shy of the $4 trillion mark.
Trading volumes are expected to be thin as U.S. stock markets close early on Tuesday and are closed for Christmas on Wednesday.
However, next week markets will enter a historically strong period for US stocks. Since 1969, the last five trading days of the year, along with the first two of the following year, have given the S&P 500 an average gain of 1.3% – a period known as the “Santa Claus Rally,” according to Stock Trader’s Almanac.
The S&P 500 is up 24.3% so far in 2024, the Dow is up 13.7% and the Nasdaq is up 30.4%.
