The major U.S. index futures are currently pointing to a higher open on Monday, with stocks likely to see further upside following the significant rebound seen during last Friday’s session.
Stocks may continue to benefit from bargain hunting, as the major averages regained ground in the previous session but remain well off the record highs set in December.
The markets are also likely to benefit from continued strength among tech stocks after contract electronics giant Foxconn reported record fourth quarter revenue amid strong AI server demand.
Foxconn is an assembly partner with AI darling and market leader Nvidia (NASDAQ:NVDA), which is jumping by 2.6 percent pre-market trading.
Positive sentiment may also be generated in reaction to a Washington Post report suggesting President-elect Donald Trump may scale back his tariff plans.
After Trump called for “universal” tariffs of as high as 10 or 20 percent on everything imported into the U.S., the Washington Post said his aides are now exploring plans that would apply tariffs to every country but only cover “critical imports.”
However, traders may be somewhat reluctant to make significant moves ahead of the release of the Labor Department’s closely watched monthly jobs report on Friday.
The markets will also be closed on Thursday in observance of the National Day of Mourning in recognition of the passing of former President Jimmy Carter.
After trending lower for several sessions, stocks showed a strong move back to the upside during trading on Friday. The major averages all moved sharply higher, with the tech-heavy Nasdaq leading the charge.
The major averages pulled back off their best levels in late-day trading but remained firmly positive. The Nasdaq surged 340.88 points or 1.8 percent to 19,621.68, the S&P 500 jumped 73.92 points or 1.3 percent to 5,942.47 and the Dow climbed 339.86 points or 0.8 percent to 42,732.13.
Despite the rebound on the day, the major averages all moved lower for the holiday-interrupted week. The Dow slid by 0.6 percent, while the Nasdaq and the S&P 500 both fell by 0.5 percent.
The strength on Wall Street came as some traders looked to pick up stocks at relatively reduced levels following recent weakness.
The Nasdaq and the S&P 500 had closed lower for five straight sessions, with the Nasdaq ending Thursday’s trading at its lowest closing level in a month.
However, the major averages remain well off the record highs set in December amid uncertainty about the outlook for the markets following recent volatility.
Some traders also remained away from their desks following the New Year’s Day holiday on Wednesday, with below average trading activity potentially exaggerating the upward move.
In U.S. economic news, the Institute for Supply Management released a report showing manufacturing activity contracted at a slower rate in the month of December.
The ISM said its manufacturing PMI inched up to 49.3 in December from 48.4 in November, although a reading below 50 still indicates contraction. Economists had expected the index to come in unchanged.
With the unexpected increase, the manufacturing PMI reached its highest level since hitting 50.3 in March 2024.
“While the index remains in contractionary territory, improved new orders, low customer inventories, and the potential for tariffs to pull forward additional demand should sustain the positive momentum over the near term,” said Matthew Martin, Senior U.S. Economist at Oxford Economics.
Technology stocks helped lead the rebound on Wall Street, as reflected by the particularly strong gain posted by the Nasdaq.
Computer hardware and semiconductor stocks turned in some of the tech sector’s best performances, with the NYSE Arca Computer Hardware Index and the Philadelphia Semiconductor Index surging by 3.1 percent and 2.8 percent, respectively.
Considerable strength was also visible among commercial real estate stocks, resulting in a 1.4 percent gain by the Dow Jones U.S. Real Estate Index.
Oil producer, utilities and housing stocks also saw significant strength, while gold stocks showed a notable move to the downside along with the price of the precious metal.
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