U.S. Futures Edge Higher as Focus Shifts to Fed After Trump’s Election Victory

U.S. stock index futures traded higher Thursday morning, continuing the positive momentum generated by Donald Trump’s presidential election win in 2024. The market is now turning its attention to the Federal Reserve’s policy decision later in the day.

Futures Overview

At 06:20 ET (11:20 GMT), futures showed modest gains across major indices:

• Dow Jones Futures: Up 75 points (0.2%)
• S&P 500 Futures: Up 9 points (0.2%)
• Nasdaq 100 Futures: Up 40 points (0.2%)

The optimism followed a strong rally on Wednesday, where all major indices closed at record highs. The Dow Jones Industrial Average surged by over 1,500 points, marking its best single-day performance since 2022. Investors reacted positively to Trump’s win, anticipating lower corporate taxes and a more business-friendly environment, especially with the possibility of a Republican majority in Congress.

Impact of Trump’s Victory

The markets saw significant moves linked to the so-called “Trump trades”—assets that mirrored Trump’s campaign performance. The U.S. dollar experienced its most significant spike in two years, and U.S. Treasury yields also increased sharply as investors began pricing in more aggressive fiscal policies under Trump’s administration.

Federal Reserve Meeting in Focus

The next critical event is the Federal Reserve’s policy announcement. Markets expect the central bank to reduce the benchmark fed funds rate by 25 basis points, bringing it down from the current 4.75% to 5% range. This follows a 50 basis point cut in September, which was aimed at supporting the labor market amid easing inflationary pressures.

Investors are eagerly awaiting Fed Chair Jerome Powell’s guidance on the future trajectory of interest rates. While current market expectations include another rate cut in December, the probability of such a move has lessened slightly in light of Trump’s electoral victory and the potential for economic changes.

Inflation Concerns and Rate Uncertainty

Despite the anticipated rate cut, inflation data continues to show signs of stickiness, leaving some uncertainty about how the Fed will approach rate policy in the near term. Powell’s remarks will be crucial in setting expectations for the remainder of the year.

Corporate Earnings on the Radar

Thursday brings several significant earnings reports:

• Pre-Market: Moderna (NASDAQ:MRNA) and Warner Bros Discovery (NASDAQ:WBD)
• After-Market: Block (NYSE:SQ), Pinterest (NYSE:PINS), and Rivian Automotive (NASDAQ:RIVN)

Investor sentiment received an additional boost from positive earnings in the semiconductor sector, with Qualcomm (NASDAQ:QCOM) stock jumping over 8% in premarket trading after the company exceeded quarterly earnings forecasts.

As the market digests the election outcomes and looks for direction from the Federal Reserve, volatility may remain elevated in the short term. However, hopes for pro-business policies and easing monetary measures continue to underpin a generally optimistic outlook for U.S. equities.