U.S. stock index futures inched higher on Friday, with investors eagerly anticipating more data to gain insights into the state of the economy and preparing for potential policy shifts under the upcoming Trump administration. At 5:40 a.m. ET, Dow E-minis saw an increase of 85 points, equivalent to 0.20%, S&P 500 E-minis were up by 16.25 points, or 0.27%, and Nasdaq 100 E-minis rose by 85.25 points, marking a 0.40% increase.
After a lackluster start to the new year, where all three major indexes experienced early gains wiped out, closing lower for a fourth consecutive session on Thursday, a deviation from the historical trend of market rallies in the final five sessions of December and the initial two sessions of January was observed. The S&P 500 and Dow Jones indices are currently on course for weekly declines of over 1% each, while the Nasdaq, predominantly technology-driven, recorded a drop of approximately 2%. The technology sector, which had been a significant driver of the market surge over the past couple of years, took a substantial hit.
Analysts have raised concerns regarding the uncertainty surrounding the potential policies to be implemented by the incoming U.S. President Donald Trump’s administration, especially considering the dominance of his Republican party in Congress. The newly-appointed Congress is scheduled to commence its inaugural session on Friday, with Trump’s inauguration set for January 20. Trump’s proposed strategies, such as corporate tax reductions, regulatory easing, tariff imposition, and stricter measures on illegal immigration, have the potential to enhance corporate profits and bolster the economy. However, they also pose risks of inflation escalation and hindrance to the pace of monetary relaxation.
The 10-year Treasury note yield remains close to the psychological threshold of 4.5%, with traders forecasting a reduction of approximately 50 basis points in interest rates by the Federal Reserve this year based on data indicating resilience in the economy, as indicated by the CME Group’s FedWatch Tool. Later today, the market will closely scrutinize the ISM report on manufacturing activity for December, preceding a pivotal employment figure scheduled for release next week.
Richmond Fed President Thomas Barkin’s insights on the economic outlook for the year, being the first among policymakers to comment this year, are also eagerly awaited. The stretched valuations of equities have been a cause for concern among investors, although many brokerage firms anticipate another year of U.S. stock market gains driven by robust corporate performance. The forthcoming quarterly earnings reports later this month will serve as a litmus test for Wall Street’s enduring bull run spanning over two years.
In premarket trading, Tesla witnessed a 1.1% increase after a 6% decline in the previous session attributed to disappointing annual quarterly deliveries. Conversely, U.S. Steel experienced an 8.2% slump following reports of President Joe Biden’s decision to veto Nippon Steel
