By Johann M Cherian and Purvi Agarwal(Reuters) -Wall Street was set for a higher open on the first trading session of 2025, with investors hoping a fresh political landscape and more interest rate cuts will enhance corporate and economic performance.
At 08:32 a.m. ET, Dow E-minis were up 274 points, or 0.64%, S&P 500 E-minis were up 42.5 points, or 0.72%, and Nasdaq 100 E-minis were up 190.5 points, or 0.90%.
The Federal Reserve easing interest rates for the first time since 2020, investor hype around artificial intelligence and expectations of companies potentially benefiting from President-elect Donald Trump’s policies helped U.S. indexes log stellar gains in 2024. The benchmark S&P 500 notched its best two-year run since 1997-1998.
Equity valuations are sitting above their long-term averages, but could be justified if corporate profits stay strong. Earnings per share for S&P 500 companies are projected to rise 10.67% in 2025, according to data compiled by LSEG.
Brokerages expect the S&P 500 to touch levels between 6,000 and 7,000 points this year, up from Tuesday’s close of 5,881.
However, 2024’s rally ended with the S&P 500 and the Dow posting monthly declines in December as markets priced in Trump’s policy proposals to be inflationary and likely to slow down the Fed’s policy easing pace this year.
With inflation still above the 2% target, traders see the central bank leaving interest rates unchanged at its meeting later this month, and expect borrowing costs to be lowered by about 50 basis points by year-end, according to the CME Group’s FedWatch Tool.
Markets also weighed the likelihood that the new administration could issue more debt to finance its policies, which could worsen market volatility. The yield on the 10-year benchmark Treasury note hovered near an eight-month high. [US/]
“Investors are hopeful that a goldilocks scenario will be the story of 2025, amid promises of lower taxes and the deregulation under a second Trump presidency,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
“But with fresh trade wars looming, if the worst of the tariff threats are imposed, the bears could be back to disrupt what has been a fairytale performance for the U.S. stock market.”
Among the first datasets of 2025, a Labor Department report showed the number of Americans filing new applications for jobless benefits came in at 211,000 for last week, compared with estimates of 222,000, per economists polled by Reuters.
A final estimate on manufacturing activity in December is due after markets open, but the main focus will be a slew of labor market data next week.
In premarket trading, Tesla was up 1.2% ahead of its quarterly deliveries numbers.
Among other megacaps, Meta and Amazon.com added over 1.1% each, while chip stocks Nvidia and Broadcom climbed 1.3% and 2.3%, respectively.
These stocks were among the ones driving the S&P 500 Growth index’s 35% jump in 2024. The Value index rose 9.8%.
SoFi Technologies dropped 1.5% after brokerage KBW downgraded the stock to “underperform” from “market perform”.
Trading volumes are expected to be light in a week shortened by Wednesday’s New Year’s holiday.
(Reporting by Johann M Cherian and Purvi Agarwal in Bengaluru; Editing by Devika Syamnath)
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