U.S. stock futures are approaching their peak levels for the year as benchmark borrowing costs remain near their lowest point since the summer.
Current Stock-Index Futures Trading
- S&P 500 futures (ES00) have risen by 10 points or 0.2% to 4778.
- Dow Jones Industrial Average futures (YM00) have gained 49 points or 0.1% to 37710.
- Nasdaq-100 futures (NQ00) have added 25 points or 0.1% to 16845.
Recent Performance and Outlook
On Friday, the Dow Jones Industrial Average (DJIA) increased by 57 points or 0.15% to reach 37305. The S&P 500 (SPX) remained unchanged at 4719, while the Nasdaq Composite (COMP) recorded a gain of 52 points or 0.35% to finish at 14814.
With the start of the final week of the year in full swing, stock-index futures are showing slight strength. The S&P 500 is currently nearing its highest level in almost two years and is less than 2% away from its all-time high. This strong performance has resulted in a seven-week winning streak, making it the best such run in six years. The equity benchmark has gained an impressive 14.6% during this period, driven by expectations of interest rate cuts by the Federal Reserve in the coming year.
Dovish Monetary Policy and Lower Borrowing Costs
The 10-year Treasury yield (BX:TMUBMUSD10Y), which had surpassed 5% in October, is now trading at around 3.9% at the beginning of this week. This recent decline in yields follows the Federal Reserve’s announcement last week, suggesting a shift towards a more accommodative monetary policy.
Stock Markets Show Mixed Performance
Trading in stock futures and bonds had a less enthusiastic start on Monday, following remarks from Federal Reserve officials, which aimed to temper expectations of imminent rate cuts. Despite this, the surge in risk appetite driven by the recent stance of the U.S. Federal Reserve has paused, as investors take a moment to catch their breath.
Stephen Innes, managing partner at SPI Asset Management, commented on the situation, saying that despite some pushback from Fed officials, interest rate futures markets still anticipate significant rate cuts from the Federal Reserve next year. As a result, the recent decline in bond yields and the dollar is expected to support risk assets throughout the week.
Fundstrat’s head of research, Tom Lee, also remains bullish on stocks. He believes that the buying activity of previously defensive fund managers, who were concerned about the macroeconomic environment, will further bolster stock performance. Lee predicts a certain amount of performance chasing into year-end, driven by this trend. Furthermore, he highlights the fact that retail investors withdrew a significant $240 billion from ETF and mutual funds this year, despite the S&P 500 experiencing a more than 25% increase. This withdrawal, combined with other factors, has created an underlying demand for equities leading up to the end of the year.
U.S. Economic Updates: Homebuilder Confidence Index for December
On Monday, the latest U.S. economic updates will be unveiled. One of the key releases is the homebuilder confidence index for December, which is scheduled to be published at 10 a.m. Eastern Time. This index serves as a vital indicator of the overall state of the housing market, providing insight into the sentiments of homebuilders regarding current and future conditions.
Keep an eye out for this important update as it offers valuable information about the health and optimism within the housing sector. The homebuilder confidence index acts as a barometer for both industry professionals and market observers, helping them gauge the strength and stability of the housing market.
Stay informed with the latest data and trends in the U.S. economy by following these updates closely.