u.s. stock futures climb after shutdown averted

Stock Climb
Stock Climb

U.S. stock futures climbed on Monday after a government shutdown was averted. Hopes for a “Santa Claus” rally looked to be alive again. S&P 500 futures were climbing 0.4% and Nasdaq 100 futures were gaining 0.7%.

These two factors could reignite the possibility of a Santa Claus rally.

U.S. stock markets suffered last week as the Federal Reserve signaled fewer rate cuts were likely in 2025 than traders had been pricing in. Gold prices are broadly stable as a softer-than-expected U.S. inflation reading rekindled hopes of interest-rate cuts next year.

The personal consumption expenditures price index rose 0.1% in November from the previous month and 2.4% over the past 12 months, below analysts’ expectations. Gold futures were flat at $2,644.30 a troy ounce following a drop the previous week after the Fed signaled fewer rate cuts next year, boosting the dollar and bond yields. Traders now await the last batch of economic data this week, including the consumer confidence reading due later Monday and initial jobless claims on Thursday.

U.S. equity futures edged higher in early Monday trading as investors looked forward to the holiday-shortened week and the traditional ‘Santa Claus Rally’ to revive stocks from their sharp December downturn. Stocks ended higher on Friday following a softer-than-expected reading of the Federal Reserve’s preferred inflation gauge, the Price Index, and some solid gains for megacap tech names. However, all three major benchmarks recorded weekly declines as Treasury yields surged and risk appetite faded.

Investors are now recalibrating their interest rate projections following the Fed’s December policy meeting last week.

Stocks rising after shutdown averted

The meeting included an increase in the central bank’s inflation forecast and a halving of its guide for 2025 rate cuts.

This pushed benchmark Treasury bond yields to multi-month highs, with rate-sensitive 2-year notes trading at 4.321% and 10-year paper rising 42 basis points over the past two weeks to 4.541%. The U.S. dollar index is also trading near a two-year high at 107.983. Wall Street’s ‘Santa Claus Rally’ has traditionally boosted stocks by around 1.3% over the final five trading days of the year and the first two of the next.

However, pressure remains, with the S&P 500 down 1.68% and the equal-weighted S&P 500 ETF down 7% for December. Heading into the start of the trading day, futures contracts tied to the S&P 500 suggest an 8-point opening bell gain while the Dow Jones Industrial Average is little-changed from Friday’s close. The tech-focused Nasdaq is called 65 points higher, with Nvidia and Palantir Technologies active in premarket trading.

In Europe, the regional Stoxx 600 benchmark rose 0.39% in early Frankfurt trading, but remains on pace for one of its worst quarterly performances in more than two years. Britain’s FTSE 100 was marked 0.14% higher in London. Overnight in Asia, Honda and Nissan formalized their merger talks, pegging a 2026 completion date for the historic tie-up, which helped lift the Nikkei 225 by 1.19% into the close of trading.

The region-wide MSCI ex-Japan benchmark was last marked 1.31% higher into the close. Investors are keenly awaiting the ‘Santa Claus Rally’ to provide a year-end boost to the stock market, and they are adjusting their strategies following the Fed’s recent policy updates. As the week progresses, traders will closely monitor inflation data, interest rate projections, and company performances for further guidance.

Maya Johnson

Maya is the editor-in-chief of KillerStartups.com. She provides value to early-stage entrepreneurs through content and her weekly newsletter. Reach her at maya@killerstartups.com

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