Market Optimism Returns as Government Funding Bill Passes
The US stock market is off to a strong start this week, thanks to a last-minute government funding bill that averted a shutdown and cooled inflation concerns. The bill, passed by Congress on Saturday, ensured that essential services like law enforcement and national parks remained operational ahead of the busy Christmas travel season.
Fed’s Forecast Sparks Rally, Then Pause
After a solid run since the presidential election in November, Wall Street’s rally hit a speed bump this month. The Federal Reserve’s forecast of only two 25-basis-point cuts for 2025, down from its September view of four cuts, raised concerns about interest-rate cuts next year. However, the Fed’s annual inflation outlook indicated a strong economy, which initially boosted market confidence.
Cooler Inflation Report Eases Worries
A cooler-than-expected inflation report on Friday eased some of those worries, helping the three main US stock indexes to bounce back. Money markets now expect roughly two 25-bps reductions in 2025, which would bring the benchmark rate to a range of 3.75% to 4.0%.
Stock Futures Inch Up
As of 05:18 a.m., 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%.
Qualcomm and Rumble Shares Soar
Qualcomm’s shares rose 3% in premarket trading after a jury found its central processors are properly licensed under an agreement with UK-based Arm Holdings. Meanwhile, shares of Rumble jumped 47.3% after the video-sharing platform announced a strategic investment of $775 million from cryptocurrency firm Tether.
Apple and Megacap Firms Tick Up
Apple, the world’s most valuable company, ticked up 0.5%, in line with most megacap and growth firms, taking its market capitalization just $115 billion short of $4 trillion.
Historically Strong Period Ahead
Trading volumes are expected to thin, with US stock markets closing early on Tuesday and shut for Christmas on Wednesday. However, markets will enter a historically strong period for US stocks next week, known as the “Santa Claus Rally”. Since 1969, the last five trading days of the year, combined with the first two of the following year, have yielded an average S&P 500 gain of 1.3%. The S&P 500 has jumped 24.3% so far in 2024, the Dow has climbed 13.7%, and the Nasdaq has surged 30.4%.
Leave a Reply