By Johann M Cherian and Purvi Agarwal
(Reuters) – Wall Street was set for a higher open in the first trading session of 2025, with investors hoping a fresh political landscape and more interest rate cuts would boost corporate and economic performance.
At 8:32 a.m. ET, the Dow E-minis were up 274 points, or 0.64%, the E-minis were up 42.5 points, or 0.72%, and the E-minis were up 190.5 points , or 0.90%.
The Federal Reserve’s interest rate cut 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 post stunning gains in 2024. The benchmark S&P 500 posted its best two-year high results in operation from 1997-1998.
The stock’s valuations are above their long-term averages, but could be justified if the company’s earnings remain strong. Earnings per share for S&P 500 companies is forecast to grow by 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 this year, down from Tuesday’s close of 5,881.
However, the rally in 2024 ended with monthly declines in the S&P 500 and Dow in December as markets priced in Trump’s policy proposals as inflationary and likely to slow the pace of Fed policy easing this year.
With inflation still above the 2% target, traders see the central bank leaving interest rates unchanged at a meeting later this month and expecting borrowing costs to be cut by about 50 basis points by the end of the year, according to CME Group (NASDAQ: ) The FedWatch tool.
Markets also weighed the likelihood that the new administration could issue more debt to finance its policies, which could exacerbate market volatility. The yield on the benchmark 10-year government bond hovered near the highest level in eight months. [US/]
“Investors are hoping the 2025 scenario will be a golden story, amid promises of lower taxes and deregulation under a second Trump presidency,” said Susannah Streeter, head of money and markets Hargreaves (LON:) Lansdowne.
“But with new trade wars on the horizon, if the worst tariff threats are enacted, the bears could return and disrupt what has been a fairy-tale performance for the US stock market.”
Among the first data sets for 2025, the Labor Department report showed that the number of Americans filing new claims for unemployment benefits was 211,000 last week, compared with an estimate of 222,000, according to economists polled by Reuters.
The final estimate of manufacturing activity in December is due to be released after the market opens, but the main focus will be a series of labor market data next week.
In premarket trade, Tesla (NASDAQ: ) rose 1.2% ahead of its quarterly delivery numbers.
Among other megacaps, Meta (NASDAQ: ) and Amazon.com (NASDAQ: ) each added over 1.1%, while chip stocks Nvidia (NASDAQ: ) and Broadcom (NASDAQ: ) rose 1.3% and 2.3%, respectively %.
Those stocks were among those that led the S&P 500 to jump 35% in 2024. The value index rose 9.8%.
SoFi Technologies (NASDAQ: ) fell 1.5% after brokerage KBW downgraded the stock to “underperform” from “market perform.”
Trading volume is expected to be light in the week truncated by the New Year holiday on Wednesday.
