A trader works on the floor at the New York Stock Exchange on Dec. 2, 2024.
Brendan Mcdermid | Reuters
Stock futures were calm on Sunday evening, with Dow riding a seven-day losing streak into a week highlighted by a key central bank meeting.
Futures tied to the Dow Jones Industrial Average ticked up 31 points, or less than 0.1%. S&P 500 futures were also up less than 0.1%. Nasdaq 100 futures dipped by less than 0.1%.
The stock market is coming off a sluggish week. The Dow lost 1.8% last week and has lost ground in each of the last seven sessions. The S&P 500 dipped 0.64%, and has retreated in four of the past five sessions. The Nasdaq Composite outperformed, grinding out a gain of 0.34% for the week.
After a broad rally following President-elect Donald Trump’s November win, the stock market appears to have reverted to a narrow tech-led move in recent days.
“The breadth that we’re seeing is really starting to dissipate a bit. It’s becoming a much more concentrated rally within a few names. And I don’t know how long that can sustain, but there’s a chance that carries forward through at least the end of the year,” Joe Mazzola, Charles Schwab’s head trading and derivatives strategist, said on Friday’s “Closing Bell: Overtime.”
The main draw of this week is the Federal Open Market Committee’s meeting on Tuesday and Wednesday, when Federal Reserve officials are widely expected to lower the benchmark interest rate again.
On Monday, investors will get some updated economic data, with preliminary purchasing managers index readings due out before the bell.
And on the individual stock level, shares of MicroStrategy could be on the move after the bitcoin proxy was announced as a new addition to the Nasdaq 100 index.
Traders expect Fed to cut this week, pause in January
The Federal Reserve is widely expected to cut rates by 0.25 percentage points on Wednesday, but traders will be playing close attention to the updated policy statement and Fed Chair Jerome Powell’s press conference for clues about what comes next.
As of Sunday night, pricing in the Fed funds futures market pointed to a 95.3% likelihood of a rate cut this week, according to the CME FedWatch tool. However, traders are also betting that the Fed will pause its rate cutting cycle in January.
That could be a welcome move for investors who are still uneasy with the path of inflation.
Logan Moulton, portfolio manager at Intelligent Wealth Solutions, said inflation appears to be “stickier” than Fed officials previously thought and that there are risks to upward pressure on inflation when the Trump administration takes office.
“Heading into 2025, I think they should at least pause,” Moulton said.
— Jesse Pound
Nasdaq Composite up more than 32% year to date
With less than three weeks left in 2024, the three major market averages are on track for a banner year.
The Nasdaq Composite leads the way, with a gain of 32.74% year to date. The S&P 500 has jumped 26.86%, while the Dow is trailing but still up 16.29%.
All 11 sectors are positive for the year, led by a 43.10% gain for communications services.
— Jesse Pound, Christopher Hayes
MicroStrategy, Palantir to join Nasdaq 100
Three new stocks are set to join the Nasdaq 100 one week from Monday.
Palantir Technologies, MicroStrategy and Axon Enterprise will all join the index prior to the market open on Dec. 23, Nasdaq announced on Friday. The stocks will also be added to the holdings of the Invesco QQQ Trust, which has more than $300 billion in assets.
Of those three, MicroStrategy is the most volatile. The stock has become a bitcoin proxy for investors as the former enterprise software company has added the cryptocurrency to its balance sheet, financed in part through debt sales.
Illumina, Super Micro Computer and Moderna will all be removed from the index.
— Jesse Pound
Stock futures open little changed
Stock futures were little changed at 6 p.m. ET Sunday, with the contracts for the three major averages marginally lower.
— Jesse Pound
