Stock Market News: Dow Set to Open Up as Markets Reverse Santa Slump
U.S. stock futures were rising strongly to start the week, extending some early gains to start the year. It’s a welcome relief after St. Nick decided not to visit the stock market.
The new year presents a variety of new risks. Some are well-publicized, such as the impact of President-elect Donald Trump’s plans to impose steep tariffs on imports. Others are less discussed, such as higher bond yields. According to Barry Knapp at Ironsides Macroeconomics, that won’t just be down to faster-than-expected inflation or Federal Reserve interest rates. It’s also down to the Fed selling down past Treasury holdings, as well as worries about the U.S. government budget.
Tighter financial conditions due to higher yields is “the largest global risk for early 2025,” Knapp wrote in a note.
Futures for the Dow Jones Industrial Average added 54 points, or 1%. Contracts tied to the S&P 500 were up 0.4%, while futures tracking the tech-heavy Nasdaq 100 rose 0.7%.
The rebound follows a disappointing spell after the Christmas holiday–the proverbial Santa Claus Rally, defined as the five trading days after Christmas and the first two of the new year–didn’t happen this time around. The S&P fell 0.5% in the period. However, coming into the session, the index has added 1% in 2025 so far.
The week ahead will provide some important economic data, including the monthly jobs report on Friday. That will be the last big insight into the health of the labor market before the Fed makes its next rate decision on Jan. 31.
A report on Friday showed U.S. manufacturing had strengthened to a nine-month high, which helped to give markets a boost. Separately, the Canadian dollar was higher after reports that Prime Minister Justin Trudeau could announce his resignation as soon as today.
Bond yields were rising early in the day. The yield on the 10-year U.S. Treasury note was at 4.621%, compared with about 4.56% Friday. The 2-year note yielded 4.289%, also slightly higher since the end of last week.