Futures inch up with economic data, upcoming policy shifts in focus
2025.01.03 06:49
(Reuters) – U.S. stock index futures edged higher on Friday, as investors awaited more data for insights on the health of the economy and braced for likely policy changes under the incoming Trump administration.
At 05:40 a.m. ET, Dow E-minis were up 85 points, or 0.20%, E-minis were up 16.25 points, or 0.27%, and E-minis were up 85.25 points, or 0.40%.
Wall Street had a dour start to the new year, with all three major indexes erasing early gains to close lower for a fourth straight session on Thursday, bucking a historical trend where markets rally in the last five sessions of December and the first two sessions of January.
The benchmark S&P 500 and blue-chip Dow are on track for weekly declines of over 1% each, while the tech-heavy Nasdaq has logged a drop of about 2%. Technology stocks that have led much of the rally over the past two years took the heaviest beating.
Analysts have pointed to uncertainty around the policies incoming U.S. President Donald Trump’s administration could implement, given that his Republican party also dominates Congress. The newly-elected Congress is set to commence its first session on Friday and Trump will be sworn in on Jan. 20.
Trump’s proposals to lower corporate taxes, ease regulations, impose tariffs and clamp down on illegal immigration could boost corporate profitability and the economy, but they also threaten to spur inflation and impede the pace of monetary easing.
The yield on the 10-year Treasury note is pinned near the psychological level of 4.5% and according to the CME Group’s (NASDAQ:) FedWatch Tool, traders see the Federal Reserve lowering interest rates by about 50 basis points this year as data continues to signal resilience in the economy.
Later in the day, markets will parse ISM’s report on manufacturing activity for December, ahead of a key employment figure due next week.
The first among policymakers to comment on the economic outlook this year, Richmond Fed President Thomas Barkin’s remarks are also on tap.
Stretched equity valuations have been a concern for investors but most brokerages expect another year of gains for U.S. stocks, propelled by strong corporate performance. Quarterly earnings reports due later in the month will test Wall Street’s more than two-year bull run.
Tesla (NASDAQ:) added 1.1% in premarket trading, after sliding over 6% in the previous session on a disappointing annual quarterly deliveries report.
U.S. Steel slid 8.2% after sources said President Joe Biden had decided to officially block Nippon Steel’s proposed $14.9 billion purchase of the company, dealing a probably fatal blow to the contentious merger plan.
Block rose 2.8% after brokerage Raymond (NS:) James raised its rating to “outperform” from “market perform”.
U.S. automobile sales for December, expected later in the day, are also in focus.
Trading volumes are expected to be subdued following the New Year’s holiday on Wednesday.
