U.S. stock index futures showed modest gains on Sunday evening, as Wall Street took some relief from softer inflation data, though investors remained cautious about the Federal Reserve’s anticipated slower pace of interest rate cuts in the coming year.
The Federal Reserve’s projection of fewer rate cuts in 2025, revealed last week, had triggered significant losses across Wall Street, with indexes experiencing deep declines over two consecutive days and resulting in weekly losses. However, investors are now looking at the latest inflation data for guidance.
As of 18:40 ET (23:38 GMT), S&P 500 Futures rose 0.3%, reaching 6,020.50 points, while Nasdaq 100 Futures climbed 0.4% to 21,655.25 points. Dow Jones Futures gained 0.3%, reaching 43,425.0 points.
PCE Data and Fed Signals Impact Rate Outlook
The latest PCE price index, a key inflation gauge closely monitored by the Federal Reserve, rose by just 0.1% in November—slower than the 0.2% increase seen in October. This brought the annual PCE inflation rate to 2.4%, slightly below the expected 2.5%.
While inflation showed signs of cooling, it still remains above the Fed’s 2% target, highlighting the persistence of inflationary pressures. The Federal Reserve has indicated a cautious approach to monetary policy, emphasizing the need for further progress on inflation before considering additional rate cuts.
Recent comments from Fed officials also underscored uncertainty regarding fiscal policy, including the potential impact of tariffs and other policies from the new Trump administration. This uncertainty appears to have influenced the Fed’s more conservative forecast of just two rate cuts in 2025, compared to four cuts previously expected.
The Fed’s decision to reduce rates by 25 basis points last Wednesday came with the forecast of a slower pace of rate cuts next year.
Tech Stocks Lead Wall Street Rebound Despite Weekly Losses
Following a sharp slump earlier in the week, Wall Street indexes showed signs of recovery on Friday. However, they still ended the week lower, with concerns over higher interest rates lingering. Technology stocks, which had taken a hit after the Fed’s announcement, staged a rebound, leading the broader rally.
Notable gains were seen in major tech stocks: NVIDIA Corporation (NASDAQ: NVDA) surged 3.1%, Micron Technology Inc. (NASDAQ: MU) climbed 3.5%, and Broadcom Inc. (NASDAQ: AVGO) rose 1.1%. Intel Corporation (NASDAQ: INTC) also gained 2.4%.
On the downside, electric vehicle maker Tesla Inc. (NASDAQ: TSLA) saw a near 3.5% drop.
For the day, the S&P 500 gained 1.1%, closing at 5,930.90 points, the Dow Jones Industrial Average rose 1.2% to 42,841.06, and the NASDAQ Composite increased by 1% to 19,572.60 points.
However, the weekly performance was mixed. The S&P 500 saw a nearly 2% decline, the Nasdaq lost 1.8%, and the Dow recorded a 2.3% drop for the week.
Despite this week’s volatility, investors remain focused on the Federal Reserve’s future rate decisions and their potential impact on market performance in 2025.
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