By Johann M Cherian and Pranav Kashyap
(Reuters) – Wall Street’s main indexes were poised to open higher on Friday, as investors kept a close eye on upcoming economic data and geared up for potential policy shifts under the incoming Trump administration.
At 08:34 a.m. ET, Dow E-minis were up 140 points, or 0.33%, E-minis were up 21.75 points, or 0.37% and E-minis were up 101 points, or 0.48%.
Wall Street had a dour start to the new year, with the S&P 500 and Nasdaq erasing early gains to close lower for a fifth straight session on Thursday, bucking a historical trend where markets rally in the last five sessions of December and the first two sessions of January.
The benchmark S&P 500 and blue-chip Dow are on track for weekly declines of over 1% each, while the tech-heavy Nasdaq has logged a drop of about 2%. Technology stocks that have led much of the rally over the past two years took the heaviest beating.
Analysts have highlighted uncertainty surrounding the policies that President-elect Donald Trump’s administration might roll out, especially with his Republican party holding sway over Congress. The newly elected Congress will begin its first session on Friday, with Trump set to take the oath of office on Jan. 20.
Trump’s proposals, ranging from slashing corporate taxes and easing regulations to imposing tariffs and curbing illegal immigration, could boost corporate profits and energize the economy. However, they also pose certain risks.
“It’s a complicated picture. At first, investors were thinking back in November that (election results) is a wonderful thing because it is a clear market friendly result,” said Peter Andersen, founder of Andersen Capital Management.
“The main issue people will start focusing on is, if his decisions will be inflationary and if they are, does that signal that the Fed will do an abrupt course change and start raising rates.”
Traders now expect the Federal Reserve to lower rates by about 50 basis points this year, per the CME Group’s (NASDAQ:) FedWatch Tool.
Meanwhile, the yield on the 10-year Treasury note remains anchored near the psychological level of 4.5%.
Inflows into U.S. equity funds experienced a sharp decline in the week leading up to Jan. 1.
Later in the day, markets will parse ISM’s report on manufacturing activity for December, ahead of a key employment figure due next week.
Comments from Richmond Fed President Thomas Barkin are also on tap.
Stretched equity valuations have been a concern for investors but most brokerages expect another year of gains for U.S. stocks, propelled by strong corporate performance.
In premarket trade, alcoholic beverage makers such as Constellation Brands (NYSE:), Molson Coors (NYSE:), and Brown-Forman slipped more than 1%, after the U.S. surgeon general urged cancer warnings for alcoholic drinks.
U.S. Steel slid 8% after President Joe Biden blocked Nippon Steel’s proposed $14.9 billion purchase of the company.
Block rose 3.1% after brokerage Raymond (NS:) James raised its rating to “outperform” from “market perform”.
Trading volumes are expected to be subdued following the New Year’s holiday on Wednesday.
(This story has been corrected to say that the S&P 500 and Nasdaq closed lower for a fifth, not fourth, straight session on Thursday, in paragraph 3)
