U.S. Stocks Rise; Inflation and Fed in the Spotlight
U.S. stock markets and index futures rose on Monday, extending their recent rally, as investors focused on upcoming inflation data and insights from Federal Reserve officials set to speak this week.
In early trading, Dow Jones futures were up about 175 points, up 0.4%, S&P 500 futures were up about 21 points, up something close to 0.4%, while Nasdaq 100 futures were up 55 points, up 0.3%.
Wall Street’s major indexes surged during the second half of the previous week following former President Donald Trump’s declared victory in the 2024 presidential election. With the Republican Party poised to control both houses of Congress, markets anticipate a smoother path for significant policy changes.
The Dow Jones Industrial Average and the S&P 500 each gained nearly 4% last week, marking their best performance since November 2023, while the Nasdaq Composite surged over 5%. All three benchmarks closed Friday’s session at record highs. Trading volumes on Monday are expected to be light due to the Veterans Day holiday.
CPI Data and Fed Speakers
Investor attention this week is on the October consumer price index (CPI) data, seeking further confirmation of inflationary trends. This release follows the Federal Reserve’s recent 25 basis point rate cut and its data-driven approach to future monetary policy decisions. CPI results are expected to influence rate expectations, with markets currently pricing a 65.9% chance of another 25 basis point cut in December.
Despite some easing earlier this year, inflation has shown resilience in recent months due to sustained economic and labor market strength. In addition to the CPI, speeches by multiple Federal Reserve officials this week will shed light on the central bank’s approach to future rate adjustments.
“Animal Spirits” and Market Optimism
Monday lacks significant economic data releases, but the quarterly earnings season continues with results from companies like Live Nation Entertainment (LYV) and Aramark (ARMK). Analysts at Evercore ISI predict continued market growth, projecting the S&P 500 to reach 6,600 by mid-2025, driven by “animal spirits” ignited by Trump’s election victory. This optimism reflects a longer-term trend rather than a mere post-election bounce.
Trump’s victory provided the stock market with its most robust post-election day rally in over a century, signaling potential for broader market momentum in the months ahead.
Oil Prices Retreat on Chinese Disappointment
Oil prices declined as traders weighed China’s newly approved 10 trillion yuan ($1.4 trillion) fiscal stimulus package and the reduced supply concerns following Hurricane Rafael’s downgrade. Despite China’s measures to address public debt levels, the absence of targeted private consumption initiatives left investors underwhelmed. Weekend data highlighting ongoing deflation in China further dampened sentiment.
In the U.S., fears of significant production disruptions eased as Hurricane Rafael weakened to a tropical storm upon reaching Cuba.
This combination of global economic data, evolving fiscal policies, and corporate earnings results will continue to shape market dynamics throughout the week.