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U.S. stock index futures opened the new year on a positive trajectory, reflecting investor optimism following a year of stellar market performance. By 05:25 ET (10:25 GMT), Dow Jones Futures rose 195 points (0.5%), S&P 500 Futures gained 38 points (0.7%), and Nasdaq 100 Futures climbed 165 points (0.8%).
The upbeat start to 2025 comes after a subdued finish to 2024, where a lack of a traditional “Santa Rally” left markets under pressure. Concerns about a slower pace of interest rate cuts by the Federal Reserve and uncertainty over the policies of incoming President Donald Trump weighed on sentiment in December.
Despite this, 2024 was a banner year for U.S. equities. The NASDAQ Composite surged 28.6%, driven by an AI-fueled rally in technology stocks. The S&P 500 advanced 23.3%, while the Dow Jones Industrial Average gained nearly 13%.
Trump Policies and Fed Decisions Shape 2025 Outlook
Investor focus in the early months of 2025 will center on the economic and international policies of President-elect Donald Trump, who takes office later in January. Trump’s promise of expansionary fiscal policies has been tempered by his pledge to impose significant trade tariffs on key U.S. trading partners, including China, Canada, and Mexico.
The uncertainty surrounding these policies has sparked caution among investors. Following Trump’s election victory in November, initial market exuberance gave way to profit-taking in December amid concerns about the potential for long-term inflationary pressures.
Adding to the cautious sentiment, the Federal Reserve recently signaled a slower pace of interest rate cuts for 2025, citing persistent inflation and a strong labor market.
Key Data on the Horizon
While the holiday-shortened week has seen limited economic data releases, investors are anticipating Thursday’s jobless claims report and the S&P Global manufacturing PMI for December. These will offer a glimpse into the labor market and industrial activity ahead of next week’s official monthly jobs report.
Apple Discounts in China Highlight Market Pressures
In corporate news, Apple (NASDAQ:AAPL) is offering rare discounts on its latest iPhone models in China, signaling heightened competition in the world’s largest smartphone market. Apple has been facing declining market share in China, as domestic manufacturers continue to gain ground.
As the U.S. market kicks off 2025, investors are balancing optimism from last year’s impressive gains with caution over policy uncertainty and inflationary pressures, setting the stage for what could be a dynamic and volatile year ahead.
