Wall Street Set to Open Higher as Investors Monitor Economic Data and Policy Shifts Under Trump Administration

Wall Street’s major indexes were set to open higher on Friday as investors focused on upcoming economic data and prepared for potential policy changes under the incoming Trump administration.

At 08:34 a.m. ET, Dow E-minis were up by 140 points, or 0.33%, S&P 500 E-minis rose by 21.75 points, or 0.37%, and Nasdaq 100 E-minis gained 101 points, or 0.48%.

The previous day saw a rough start to the year for Wall Street, with all three major indexes shedding early gains and closing lower for the fourth consecutive session. This downturn defied the typical market rally seen during the final five sessions of December and the first two of January.

The S&P 500 and Dow are poised for weekly declines of over 1%, while the tech-heavy Nasdaq has fallen by about 2%. Technology stocks, which had driven much of the rally in the past two years, faced the heaviest losses.

Analysts pointed to uncertainty surrounding the policies that President-elect Donald Trump might introduce, especially with his Republican party controlling Congress. The newly elected Congress will convene for its first session on Friday, with Trump set to take office on January 20.

Trump’s proposals, including slashing corporate taxes, easing regulations, imposing tariffs, and curbing illegal immigration, could potentially boost corporate profits and invigorate the economy. However, they also carry certain risks.

“It’s a complicated picture,” said Peter Andersen, founder of Andersen Capital Management. “At first, investors thought the election results were market-friendly, but now the focus is shifting to whether his decisions will be inflationary and, if so, whether that signals an abrupt change in the Federal Reserve’s course, leading to interest rate hikes.”

Traders are now anticipating a 50-basis-point cut in interest rates this year, according to the CME Group’s FedWatch Tool.

The yield on the 10-year Treasury note remains near the key level of 4.5%.

In the lead-up to January 1, inflows into U.S. equity funds sharply declined.

Later today, markets will assess the ISM’s report on December manufacturing activity, followed by a key employment report next week. Additionally, Richmond Fed President Thomas Barkin is scheduled to make comments.

While stretched equity valuations remain a concern, most brokerages still predict another year of gains for U.S. stocks, supported by strong corporate earnings.

In premarket trading, alcoholic beverage stocks like Constellation Brands, Molson Coors, and Brown-Forman fell more than 1%, following a recommendation from the U.S. surgeon general to include cancer warnings on alcoholic drinks.

U.S. Steel dropped 8% after President Joe Biden blocked Nippon Steel’s proposed $14.9 billion acquisition of the company.

Meanwhile, Block saw a 3.1% increase after Raymond James upgraded the stock to “outperform” from “market perform.”

Trading volumes are expected to be lighter following the New Year’s holiday on Wednesday.

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