By Medha Singh and Purvi Agarwal
(Reuters) – U.S. stock index futures were subdued on Monday after a last-minute government funding bill averted a shutdown and investors parsed the central bank’s forecast on interest-rate cuts next year.
The United States Congress passed spending legislation early on Saturday, minutes after the funding’s expiration, which could have disrupted everything from law enforcement to national parks ahead of the busy Christmas travel season.
After a solid run since the November presidential election, Wall Street’s rally hit a bump this month, especially after the U.S. Federal Reserve forecast just two 25-basis-point rate reductions for 2025 – down from its September view of four cuts – and raised its annual inflation outlook, a sign that the world’s largest economy was in strong health.
“Last week’s (Fed) meeting reinforced our baseline view that a skip at the January meeting could turn into an extended pause in 2025,” economists at Deutsche Bank said in a note.
However, a cooler-than-expected inflation report on Friday eased some worries about rate cuts next year, helping the three main U.S. stock indexes bounce back.
“I think those who got their hopes up with one set of inflation data will be disappointed,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank, pointing to President-elect Donald Trump’s potential policies.
Money markets expect roughly two 25-bps reductions in 2025, which would bring the benchmark rate to a range of 3.75% to 4.0%, from about a 3.50 to 3.75% range two weeks ago.
In other economic data, a measure of consumer confidence for December is due at 10 a.m. ET.
At 07:04 a.m. ET, Dow E-minis were down 119 points, or 0.27%, S&P 500 E-minis were down 3.75 points, or 0.06% and Nasdaq 100 E-minis were up 35.5 points, or 0.16%.
Qualcomm’s shares rose 2.5% in premarket trading after a jury found its central processors are properly licensed under an agreement with UK-based Arm Holdings. Shares of Arm, which has vowed to seek a fresh trial, fell about 3.1%.
Shares of Rumble jumped 43.4% after the video-sharing platform said it has received a strategic investment of $775 million from cryptocurrency firm Tether.
Apple, the world’s most valuable company, ticked up 0.2%, in line with most megacap and growth firms, taking its market capitalization to $3.86 trillion.
Eli Lilly gained 1.5% after the U.S. Food and Drug Administration approved the drugmaker’s weight-loss treatment, Zepbound, for obstructive sleep apnea on Friday.
Trading volumes are expected to thin, adding some volatility, with U.S. stock markets closing early on Tuesday and shut for Christmas on Wednesday.
Markets are also entering a historically strong period for U.S. stocks. 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% – a period known as the “Santa Claus Rally”, according to the Stock Trader’s Almanac.
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%.
(Reporting by Medha Singh and Purvi Agarwal in Bengaluru; Editing by Pooja Desai)
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