Nasdaq Index, Dow Jones, S&P 500 News: Futures Climb Amid Easing Inflation Expectations

Highlights

• US stock futures rise with declining inflation.
• Major US indexes record consecutive gains.
• Fed signals potential rate cuts ahead.

US Stock Futures Rise on Cooling Inflation

As U.S. inflation shows signs of easing, major U.S. stock index futures experienced a boost during Tuesday’s pre-market session. Investors are increasingly hopeful that the Federal Reserve might implement interest rate cuts early next year. At 10:09 GMT, Dow Jones Industrial Average futures rose by 0.11%, S&P 500 Index futures increased by 0.14%, and Nasdaq-100 Index futures gained 0.19%.

Consecutive Gains for Major Averages

Remarkably, the three major averages have recorded their eighth consecutive week of gains. This streak marks a first since 2017 for the S&P 500 and since 2019 for the Dow. The S&P 500, Dow, and Nasdaq have advanced by 0.8%, 0.2%, and 1.2% respectively for the week.

S&P 500: Record Highs

Driven by the latest inflation data, the S&P 500 continued its year-end rally, with 37 stocks reaching new 52-week highs and 13 achieving all-time highs. Notable among these are Booking Holdings, Hilton Worldwide, and Ametek, demonstrating significant milestones since their respective IPOs.

Global Market Influences

Tuesday’s trading, influenced by holiday closures in major markets, mirrored the trends in Asian trading. MSCI’s Asia-Pacific index outside Japan saw a modest rise, while Japan’s Nikkei maintained a strong annual performance. Conversely, China’s stocks experienced a slight decline, largely influenced by the semiconductor sector.

US Economic and Federal Reserve Outlook

The recent U.S. economic report shows a decline in prices in November, the first in over three and a half years, according to the Personal Consumption Expenditures (PCE) price index. This decrease indicates a resilient economy and is influencing market outlooks.

The Federal Reserve, in response, is signaling a potential end to its monetary tightening cycle, with the possibility of interest rate cuts in the near future. Market expectations, as per the CME FedWatch tool, show a 75% chance of a 25 basis points rate cut by the Fed in March.

There’s also anticipation of more than 150 basis points of rate cuts over the next year. This shift in the Fed’s policy, moving away from an aggressive anti-inflation stance, suggests an impending easing of financial conditions, important for future market strategies.

Short-Term Forecast

Given these developments, the short-term outlook for the U.S. stock market appears bullish. Investors are eagerly awaiting upcoming housing market data, which could provide further insights into the economic landscape and influence market trends.

Technical Analysis

The E-mini S&P 500 Index is currently exhibiting bullish tendencies. Today’s daily price at 4812.00 is marginally higher than the previous close of 4805.25, indicating positive momentum.

The index is trading well above both its 200-day and 50-day moving averages, at 4459.40 and 4540.36 respectively, which further reinforces bullish sentiment. Typically, prices above these key moving averages suggest upward market strength.

Additionally, the current daily price is above the main support level of 4494.00 and slightly below the minor support turned pivot point at 4562.50.

This position above key support levels, combined with its stance relative to the moving averages, points towards a continued upward trend, unless a significant market shift occurs.