U.S. Stock Futures Up, Light Trading in Shortened Holiday Week
U.S. stock index futures rose on Monday as Wall Street reacted positively to softer inflation data at the beginning of a holiday-shortened week.
In Monday’s trading, Dow Jones futures were up 5 points, or 0.1%, S&P 500 futures were up 10 points, or 0.2%, and Nasdaq 100 futures gained about 60 points, or 0.3%.
Trading is expected to remain thin this week as the New York Stock Exchange will close early on Tuesday for Christmas Eve and remain closed on Christmas Day.
Investors Eye PCE Data for Rate Clues
The Personal Consumption Expenditures (PCE) Price Index—a key inflation gauge favored by the Federal Reserve—rose 0.1% in November, slowing from October’s 0.2% increase. This brought the annual PCE inflation rate to 2.4%, slightly below the forecast of 2.5%.
Although the data indicates some cooling in inflation, it remains above the Fed’s 2% target, underscoring persistent inflationary pressures.
The Fed has maintained a cautious stance on monetary policy, signaling the need for continued progress on inflation before considering additional rate cuts.
Comments from Fed officials on Friday revealed that fiscal policy uncertainty, including tariffs, is now being factored into their projections.
Officials also noted uncertainty about how the policies of the incoming Donald Trump administration will influence interest rate forecasts, leading some to reduce their expectations for rate cuts in 2025.
The Fed cut rates by 25 basis points last Wednesday, but it reduced its projection for 2025 to two rate cuts, down from an earlier forecast of four.
Wall Street Marked by Volatility
Wall Street has been marked by significant volatility recently. The Dow Jones Industrial Average extended its streak of losses to 10 consecutive sessions—the longest since 1974—and plunged more than 1,000 points last Wednesday after the Fed announced fewer rate cuts for next year than expected.
However, Friday’s lower-than-expected inflation data helped stocks regain some of their losses.
So far in December, the Dow has declined nearly 4.6%, while the S&P 500 has shed 1.7%. In contrast, the tech-heavy Nasdaq Composite has bucked the trend, gaining 1.8% this month.
According to Yardeni Research, investors should “buy a collar” in January as market volatility is expected to increase with Donald Trump’s return to power. This volatility, driven by potential policy changes under Trump 2.0, could create new buying opportunities.
Rumble Soars on Investment News
Shares of online video platform Rumble (RUM) surged more than 45% in pre-market trading after receiving a $775 million investment from Tether, the digital asset firm behind the USDT coin.
Crude Oil Prices Stabilize After Prior Week’s Losses
Crude oil prices dipped slightly on Monday as traders digested softer-than-expected inflation data and news that a potential U.S. government shutdown was averted.
Over the weekend, President Joe Biden signed a temporary bill to fund the government through March, alleviating concerns about disruptions during the holiday season that could have impacted travel and fuel demand.
Oil markets also benefited from easing inflationary pressures, which increase the likelihood of further Federal Reserve rate cuts next year, potentially boosting economic activity.