U.S. stock futures edged higher on Monday, signaling a positive start to the week as traders bet on progress in trade talks between Washington and Beijing and look ahead to a crucial Federal Reserve policy decision.
The upcoming meeting between U.S. President Donald Trump and Chinese President Xi Jinping is drawing global attention, with investors hoping the summit will deliver a breakthrough on tariffs and trade.
Over the weekend, Treasury Secretary Scott Bessent met with Chinese officials in Malaysia, describing the negotiations as having produced a “very successful framework” for the leaders to finalize this Thursday. Bessent also suggested that Beijing is expected to resume buying U.S. soybeans and postpone export restrictions on rare earths, a major source of recent tension.
Speaking on his way to Japan, Trump voiced confidence in the talks, saying he expects to reach an agreement following new trade and mineral deals with Malaysia and Cambodia.
Investor sentiment is also being lifted by expectations of further monetary easing. Markets anticipate a 25 basis point rate cut from the Fed on Wednesday. Traders will be watching for any signals about whether additional reductions could follow later this year.
CME Group’s FedWatch Tool shows a 96.7% probability of a quarter-point cut this week and a 95.8% chance of another in December.
Stocks ended last week on a strong note, with all three major benchmarks closing at record highs. The Dow Jones Industrial Average advanced 472.51 points, or 1.0%, to 47,207.12. The Nasdaq Composite gained 263.07 points, or 1.2%, to 23,204.87, and the S&P 500 climbed 53.25 points, or 0.8%, to 6,791.69.
For the week, the S&P rose 1.9%, while the Dow and Nasdaq surged 2.2% and 2.3%, respectively, as investors reacted to signs of cooling inflation that support further Fed easing.
Data from the U.S. Department of Labor showed consumer prices increased by 0.3% in September, below the 0.4% forecast, while annual inflation rose to 3.0%, slightly under expectations. Core inflation increased 0.2% on the month and slowed to 3.0% year-on-year.
“Consumer inflation came in cooler in September, reinforcing expectations that the Fed will cut rates again at next week’s policy meeting,” said Kathy Bostjancic, Chief Economist at Nationwide.
She added, “We remain of the view that the Fed will cut the fed fund rate by another 50bps by year-end as the weakening in the labor market outweighs concerns about moderately higher inflation stemming mostly from the tariffs.”
Corporate earnings also provided support for the rally. Ford Motor Company (NYSE:F) soared 12.2% after beating analysts’ estimates on revenue and earnings. Procter & Gamble (NYSE:PG) gained 0.9% following strong fiscal Q1 results, while Intel Corporation (NASDAQ:INTC) rose 0.3% despite trimming early gains.
Computer hardware stocks led the charge, with the NYSE Arca Computer Hardware Index climbing 3.2% to a record close. Banks followed suit, pushing the KBW Bank Index up 2.1%. Strength was also seen in semiconductor, brokerage, and networking shares, while gold stocks weakened slightly alongside a dip in bullion prices.