US Stock Market Overview

Investing.com – US stock futures rise, suggesting a possible extension to a rally in equities following Donald Trump's election win last week. Key inflation data will highlight the economic calendar this week, with investors eager to see if the figures offer clues about price pressures and Federal Reserve interest rate policy. Additionally, Bitcoin hits a record high as traders anticipate a potentially looser regulatory environment for the crypto industry under the incoming Trump administration.

1. Futures Higher

US stock futures pointed higher on Monday as investors assessed the sustainability of the post-election rally while looking forward to new economic data this week.

By 03:20 ET (08:20 GMT), the Dow futures contract had added 82 points (0.2%), S&P 500 futures jumped by 15 points (0.3%), and Nasdaq 100 futures gained 73 points (0.4%).

The benchmark S&P 500 reached a fresh all-time peak, hitting the 6,000 level for the first time on Friday, buoyed by hopes that Trump would implement tax cuts and extensive deregulation during his second term. Sentiment was also enhanced by the Federal Reserve, which cut interest rates by a quarter of a percentage point as expected last week. Policymakers noted that the economy is on a “solid pace,” despite slight easing in labor demand and inflation remaining “somewhat elevated.”

2. Inflation Data Ahead

The Federal Reserve's approach to future interest rate decisions in 2023 and 2025 will largely depend on US price pressure outlooks. Consequently, the October inflation data release from the Department of Labor on Wednesday will be crucial for investors.

Economists expect the consumer price index to have risen at an annual rate of 2.4% last month, matching September’s pace. September's annual increase was the smallest in over three-and-a-half years, reinforcing expectations for Fed rate cuts. However, Trump's election may complicate the central bank's position, as higher tariffs could potentially increase consumer prices. After the Fed's 25-basis point reduction on Thursday, Chair Jerome Powell provided little guidance on the pace of future rate cuts.

3. Bitcoin's New Record High

Bitcoin surged to a record high, extending the rally from last week due to increased optimism for cryptocurrencies following Trump's victory. The world's largest cryptocurrency peaked at $81,792.4, trading at $81,165.3 by 03:21 ET.

This surge in Bitcoin and other cryptocurrencies is driven by traders’ expectations that Trump and new pro-crypto lawmakers will adopt a more lenient regulatory approach to the industry. The president-elect expressed favorable views about crypto during his campaign, promising to reduce regulatory burdens and establish a reserve for the country’s Bitcoin supply. Traders believe that the Securities and Exchange Commission, which has pushed for more regulations during Biden's administration, will ease its stance.

4. Hong Kong Stocks Slip As Chinese Stimulus Underwhelms

Stocks in Hong Kong declined on Monday as new fiscal stimulus measures from China fell short of investor expectations. The Hang Seng index slid 1.7%, while China’s Shanghai Shenzhen CSI 300 and Shanghai Composite experienced volatility, rising by 0.7% and 0.6%, respectively.

Following the close of Chinese markets on Friday, the National People’s Congress announced a debt swap program worth about 10 trillion yuan ($1.4 trillion) aimed at improving local government finances. However, the absence of direct fiscal stimulus targeted at bolstering China’s struggling housing market and sluggish personal consumption did not meet many traders' hopes, particularly with concerns over potential harsh US import tariffs during the impending Trump administration.

5. Crude Prices Stable

Oil prices steadied on Monday as traders evaluated the latest stimulus plan from China, the top oil importer, and the diminished supply disruptions from Hurricane Rafael. By 03:22 ET, the Brent contract gained 0.2% to $73.99 a barrel, while U.S. crude futures (WTI) remained mostly unchanged at $70.39 per barrel.

Prices had weakened on Friday after Beijing approved measures aimed at lowering government debt levels. Meanwhile, fears of immediate disruptions in US oil output were alleviated as Hurricane Rafael weakened into a tropical storm upon making landfall in Cuba.

(Reuters contributed reporting.)