By Johann M Cherian and Pranav Kashyap
(Reuters) – Wall Street’s major indexes were poised to open higher on Friday as investors closely watched upcoming economic data and braced for potential policy changes under the incoming Trump administration.
At 8:34 a.m. ET, the Dow E-minis were up 140 points, or 0.33%, the E-minis were up 21.75 points, or 0.37%, and the E-minis were up 101 points, or 0.48%.
Wall Street had a bleak start to the new year, with the S&P 500 and Nasdaq erasing early gains to close lower for a fifth straight session on Thursday, bucking a historical trend that has seen markets rally over the last five sessions of December and the first two sessions of January.
The benchmark S&P 500 and the blue-chip Dow are on track for weekly declines of more than 1% each, while the tech-rich Nasdaq is down about 2%. Technology stocks that have led much of the rally over the past two years have taken the hardest hits.
Analysts have highlighted the uncertainty surrounding the policies that the administration of President-elect Donald Trump could implement, especially given that his Republican Party has influence over Congress. The newly elected Congress will begin its first session on Friday, and Trump will be sworn in on January 20.
Trump’s proposals, ranging from cutting corporate taxes and easing regulations to imposing tariffs and cracking down on illegal immigration, could boost corporate profits and jump-start the economy. However, they also present certain risks.
“It’s a complicated picture. Initially, back in November, investors thought (the election results) were a wonderful thing because it was a clear market-friendly result,” said Peter Andersen, founder of Andersen Capital Management.
“The main question that people will start to focus on is whether his decisions will be inflationary and if they are, whether that signals that the Fed will make a sudden change in course and start raising rates.”
Traders now expect the Federal Reserve to cut rates by about 50 basis points this year, according to CME Group’s (NASDAQ: ) FedWatch tool.
Meanwhile, the yield on the 10-year Treasury bill remains anchored near the psychological level of 4.5%.
Inflows into US equity funds fell sharply in the week leading up to January 1st.
Later in the day, markets will analyze the ISM’s manufacturing activity report for December, ahead of the key employment figure due next week.
Comments from Richmond Fed President Thomas Barkin are also available.
Strained stock valuations worried investors, but most brokerages expect another year of gains for U.S. stocks, boosted by strong corporate results.
In pre-sale, liquor makers such as Constellation Brands (NYSE: ), Molson Coors (NYSE: ) and Brown-Forman fell more than 1%, after the US surgeon general called for cancer warnings on alcoholic beverages.
US Steel slipped 8% after President Joe Biden blocked Nippon Steel’s proposed $14.9 billion purchase of the company.
The block rose 3.1% after mediation Raymond (NS:) James upgraded to “outperform” from “market perform”.
Trading volume is expected to be muted after the New Year holiday on Wednesday.
(This story was corrected to say the S&P 500 and Nasdaq closed for the fifth, not fourth, straight session on Thursday, in paragraph 3)
