U.S. Stock Futures in Red, Doubts on Santa Claus Rally
Pre-markets are in negative territory at the start of the week marking the end of 2024 and the beginning of 2025. The first two trading days of this week will be the last two trading sessions of this year and the last two trading days will be the first two days of the next year. However, the much-hyped Santa Claus rally is doubtful.
Market participants are getting more risk averse as they approach the end of this year. Profit booking across global equity markets is visible due to several uncertainties. Wall Street had a fascinating bull run in the past two years barring minor fluctuations. A large section of economists and financial researchers have already warned of overvaluations.
Moreover, geopolitical conflicts such as the prolonged war between Russia and Ukraine, the war between Israel and extremist group Hamas, Palestine, Iran and Lebanon, and political upheaval in Syria and Bangladesh add to investors’ woes.
Market participants will closely watch policies of the Trump 2.0 administration after President-elect Donald Trump takes oath on Jan. 20. Particularly, policies related to trade and tariffs will be closely monitored.
The movement and stickiness of the inflation rate, resilience of the labor market and the Fed’s policy parameters that will determine the future trajectory of the interest rate. The term structure of the U.S. Treasury Yield Curve, the movement of the U.S. Dollar Price Index, crude oil prices and finally U.S. consumption expenditures (the largest component of the U.S. GDP) will determine investment decisions of market participants.
After the opening bell today, two economic data will come. The Chicago PMI will reveal the economic health of the manufacturing sector in Illinois, Indiana and Michigan. The index is based on five major indicators: new orders, inventory levels, production, supplier deliveries, and the employment environment.
The National Association of Realtors will release the Pending Home Sales Index for November. The index measures housing contract activity, and is based on signed real estate contracts for existing single-family homes, condos, and co-ops.
The stock price of The Boeing Co. BA fell nearly 4% in pre-market trading today following the news that the acting President of South Korea, Choi Sang-mok, has ordered a comprehensive special inspection of all B737-800 aircraft of the company. On Dec. 29, a B737-800 plane of the Jeju Air of South Korea, skidded off the runway of the Muan International Airport and smashed into a wall before bursting into flames and killing 179 passengers.
