Futures rise ahead of Wall St’s first trading session in 2025
2025.01.02 06:27
(Reuters) – U.S. stock index futures edged higher before the first trading session of 2025, with investors hoping a new political landscape and more interest rate cuts will enliven corporate and economic performance.
At 05:23 a.m. ET on Thursday, Dow E-minis were up 198 points, or 0.46%, E-minis were up 34 points, or 0.57%, and E-minis were up 160.25 points, or 0.75%.
Wall Street’s main indexes logged stellar gains in 2024 and the benchmark S&P 500 notched its best two-year run since 1997-1998.
The main catalysts were the Fed easing interest rates for the first time in four years, investor hype around artificial intelligence and expectations of companies potentially benefiting from President-elect Donald Trump’s policies.
Equity valuations are sitting above their long-term averages, but could be justified if corporate profits stay strong. Earnings per share for S&P 500 companies are projected to rise 10.67% in 2025, according to data compiled by LSEG.
Brokerages expect the S&P 500 to touch levels between 6,000 and 7,000 points this year, up from Tuesday’s close of 5,881.
However, 2024’s surge ended with the benchmark index and the Dow posting monthly declines in December as markets priced in Trump’s proposals on corporate tax cuts, loose regulations, stricter immigration laws and tariffs to be inflationary and likely to slow down the pace of the Fed’s monetary policy easing this year.
With inflation still above the 2% target, traders see the central bank leaving interest rates unchanged at its meeting later this month, and expect borrowing costs to be lowered by a total of 50 basis points by year-end, according to the CME Group’s (NASDAQ:) FedWatch Tool.
Markets also weighed the likelihood that the new administration could issue more debt to finance its policies, which could worsen market volatility. The yield on the 10-year benchmark Treasury note hovered near its eight-month high. [US/]
“Investors are hopeful that a goldilocks scenario will be the story of 2025, amid promises of lower taxes and the deregulation under a second Trump presidency,” said Susannah Streeter, head of money and markets at Hargreaves (LON:) Lansdown.
“But with fresh trade wars looming, if the worst of the tariff threats are imposed, the bears could be back to disrupt what has been a fairytale performance for the U.S. stock market.”
On Thursday, traders will be eying a report on weekly jobless claims, followed by a final estimate on manufacturing activity in December, but the main focus will be a slew of labor market data next week.
In premarket trading, Tesla (NASDAQ:) added 1.3% ahead of the release of its quarterly deliveries numbers.
Among other megacaps, Meta (NASDAQ:) and Amazon.com (NASDAQ:) added 0.8% each, while chip stocks Nvidia (NASDAQ:) and Broadcom (NASDAQ:) climbed 1% and 1.9%, respectively.
These stocks were among the ones behind the S&P 500 Growth index’s 35% jump in 2024. The Value index rose 9.8%.
SoFi Technologies (NASDAQ:) dropped 2.4% after brokerage KBW downgraded the stock to “underperform” from “market perform”.
In a week shortened by Wednesday’s New Year’s holiday, trading volumes are expected to be light.
