U.S. Stock Index Futures Rise Amid Funding Bill and Inflation Optimism

(Reuters) – U.S. stock index futures inched up on Monday as a last-minute government funding bill averted a shutdown, while optimism about cooling inflation started the holiday-shortened week on a positive note.

The U.S. Congress passed spending legislation early on Saturday, minutes after the funding had expired, which could have disrupted everything from law enforcement to national parks ahead of the busy Christmas travel season.

After a solid run since the presidential election in November, Wall Street's rally hit a bump this month, especially after the Federal Reserve forecast just two 25-basis-point cuts for 2025 – down from its September view of four cuts – and raised its annual inflation outlook, a sign that the world's largest economy was in strong health.

"Last week's (Fed) meeting reinforced our baseline view that a skip at the January meeting could turn into an extended pause in 2025," economists at Deutsche Bank (ETR:DBKGn) said in a note.

However, a cooler-than-expected inflation report on Friday eased some worries about interest-rate cuts next year, helping the three main U.S. stock indexes to bounce back.

Money markets expect roughly two 25-bps reductions in 2025, which would bring the benchmark rate to a range of 3.75% to 4.0%, from about a 3.50 to 3.75% range two weeks ago.

At 05:18 a.m., Dow E-minis were up 31 points, or 0.07%, the S&P 500 E-minis were up 15.5 points or 0.26%, and the Nasdaq 100 E-minis were up 97.75 points, or 0.45%.

Qualcomm (NASDAQ:QCOM)'s shares rose 3% in premarket trading after a jury found its central processors are properly licensed under an agreement with UK-based Arm Holdings (NASDAQ:ARM). Shares of Arm, which has vowed to seek a new trial, fell about 3.3%.

Shares of Rumble jumped 47.3% after the video-sharing platform said it has received a strategic investment of $775 million from cryptocurrency firm Tether.

Apple (NASDAQ:AAPL), the world's most valuable company, ticked up 0.5%, in line with most megacap and growth firms, taking its market capitalization just $115 billion short of $4 trillion.

Trading volumes are expected to thin, with U.S. stock markets closing early on Tuesday and shut for Christmas on Wednesday.

But markets will enter a historically strong period for U.S. stocks next week. Since 1969, the last five trading days of the year, combined with the first two of the following year, have yielded an average S&P 500 gain of 1.3% – a period known as the "Santa Claus Rally", according to the Stock Trader's Almanac.

The S&P 500 has jumped 24.3% so far in 2024, the Dow has climbed 13.7% and the Nasdaq has surged 30.4%.