U.S. stock futures were trading higher on Tuesday following Monday’s selloff. All four index futures rose in trade.
The Santa Rally, a typical year-end market surge, has seemingly failed to materialize this year, with stocks experiencing a downturn. However, the S&P 500 index is on its way to achieving 20% plus return for the second consecutive year in 2024.
The 10-year and two-year Treasury notes yielded 4.51% and 4.24%, respectively. The probability of having no change in the interest rates for the upcoming Jan. 31, 2025, FOMC meeting was at 88.8%, according to CME Group’s FedWatch tool.
Futures | Change (+/-) |
Nasdaq 100 | 0.40% |
S&P 500 | 0.29% |
Dow Jones | 0.18% |
Russell 2000 | 0.38% |
In premarket trading on Tuesday, the SPDR S&P 500 ETF Trust (NYSE:SPY) was up 0.35% to $590.26 and the Invesco QQQ Trust ETF (NASDAQ:QQQ) rose 0.44% to $517.90, according to Benzinga Pro data.
Cues From The Last Session
U.S. stocks declined on Monday, with the Dow Jones Industrial Average falling over 400 points during the trading session. The tech sector continued its downward trend, with Tesla Inc. and Meta Platforms Inc. shares dropping 3.3% and 1.4%, respectively.
Despite the Monday losses, major indices still posted gains for the previous week. The Dow Jones Industrial Average rose 0.4%, ending a three-week losing streak, while the S&P 500 added 0.7% and the Nasdaq Composite climbed 0.8%.
On the economic data front, the Chicago Purchasing Managers’ Index (PMI) fell to 36.9 in December from 40.2 in November, below market expectations of 42.5. Conversely, U.S. pending home sales increased 2.2% month-over-month in November, exceeding market estimates of a 0.7% increase. The Dallas Fed’s Texas manufacturing activity index also showed improvement, rising six points to a reading of 3.4 in December.
All sectors within the S&P 500 closed lower, with consumer discretionary, materials, and healthcare sectors experiencing the largest declines.
At the close of trading on Monday, the Dow Jones Industrial Average stood at 42,573.73, down approximately 418 points. The S&P 500 fell 1.07% to 5,906.94, and the Nasdaq Composite dipped 1.19% to 19,486.79.
Index | Performance (+/-) | Value |
Nasdaq Composite | -1.19% | 19,486.78 |
S&P 500 | -1.07% | 5,906.94 |
Dow Jones | -0.97% | 42,573.73 |
Russell 2000 | -0.75% | 2,227.78 |
Insights From Analysts
Tom Lee, the head of research at Fundstrat attributed this decline to profit-taking and investor uncertainty surrounding the Federal Reserve’s future interest rate policies. However, he emphasizes that the positive market outlook for 2025 remains largely unchanged.
According to Lee, even if the S&P 500 closes the year at 5,900, it doesn’t diminish the significant potential for growth in 2025.
Looking ahead to next year, Lee said that he will closely monitor the CEO confidence index and the ISM manufacturing data for signs of economic expansion. He predicts that the S&P 500 could potentially reach 7,000 in the first half of 2025, representing substantial upside from current levels.
According to Ed Yardeni of Yardeni Research, there are multiple reasons for missing the Santa Rally. “From a sentiment perspective, there have been too many bulls. From a technical perspective, breadth has been narrowing again as a few LargeCap momentum stocks continue to outperform.”
“From a fundamental perspective, while earnings growth should remain bullish, the Fed may be done easing monetary policy for a while at the same time as the outlook for fiscal policy under Trump 2.0 is uncertain. From a valuation perspective, forward P/Es are stretched,” he added.
According to Jeff Weniger, the head of equities at WisdomTree, the S&P 500 has had positive returns in the next 12 months each time economists’ recession prediction has fallen to 15%.
Also, Jason Goepfert, consultant at White Oak Consultancy highlighted in an X post that S&P 500 futures have gapped down more than 1% during the Santa Rally period for the fifth time in 2024.
See Also: How To Trade Futures
Upcoming Economic Data
A few important data points will be released in this truncated week that will help investors determine the future course of action.
Stocks In Focus:
Commodities, Gold And Global Equity Markets:
Crude oil futures were higher in the early New York session by 0.56% to hover around $71.39 per barrel.
The gold spot index was up by 0.39% to $2,628.34 per ounce. The Dollar Index was down 0.17% to 107.944 level.
Asian markets were mostly lower on Tuesday as Japan’s Nikkei 225, Australia’s ASX 200, South Korea’s Kospi, and China’s CSI 300 declined. Whereas, Hong Kong’s Hang Seng ended higher. European markets were mixed.
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Photo courtesy: Wikimedia
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