Futures Up Ahead of a Slow Christmas Week

Stock futures opened up early Monday morning as investors sought ground while handling recession concerns. Futures on the Dow Jones Industrial Average (DJIA) gained 0.20%, while those on the S&P 500 (SPX) jumped 0.27%, as of 7 amam EST, Monday. Meanwhile, the Nasdaq 100 (NDX) futures advanced 0.36%. The major averages of the US stock market ended the last week in the red as investors reacted to the Federal Reserve’s 50-basis point interest rate hike and insinuations of more rate hikes for a longer time than expected. The central bank now expects to hike interest rates to 5.1% in order to restrict the economy desirably. On Friday, the S&P declined 1.11%, shedding 2.08% for the week and 5.58% so far this month. The Dow lost 0.85% on Friday, ending the week 1.66% lower. On the other hand, the Nasdaq 100 slipped 0.89%. In 2022, the Fed raised interest rates by 400 basis points through seven interest rate appraisals, effectively restricting the economy as evident from two straight months of deflation (October and November). Nonetheless, the labor market still stands strong and as of November, consumer spending also hasn’t slowed down as expected. These two areas of the economy need to be restricted to achieve the target inflation rate of 2%-3% (a far cry from the current rate of 7.1%). This makes a high-interest rate environment inevitable for a few more months to a year. Thus, recession risk remains. On the economic front, the National Association of Home Builders survey will be out on Monday, giving investors insights into how November’s consumers have reacted to the idea of ​​owning a home in the middle of high mortgage rates. On the earnings front, two important reports that await investors on Tuesday are those of FedEx (NYSE:FDX) and Nike (NYSE:NKE). Traders are expected to keep a close eye on the earnings commentary to gauge the performance of the retail sector. The week ahead is likely to be slower than the rest because of the holidays, and it will be interesting to see whether investors are optimistic enough to end the year with a typical “Santa Claus rally” the following week. Interested in more economic insights? Tune in to our LIVE webinar. Disclosure

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