U.S. equity futures pointed to a slightly higher open on Wednesday, suggesting that major indexes may extend the rebound that has taken shape over the past several sessions.
The recent momentum has helped the Dow, S&P 500, and Nasdaq recover sharply from the steep decline earlier in the month, with traders appearing less concerned about valuation pressures that previously pulled the Nasdaq and S&P 500 to their lowest levels in more than two months.
Optimism around a potential Federal Reserve rate cut in December has been a major driver of the upswing. Still, futures held their ground even after a series of stronger-than-expected U.S. economic reports.
One of these came from the Commerce Department, which released long-delayed data showing that new orders for durable goods rose 0.5% in September—outpacing forecasts for a 0.3% increase. August’s initially reported 2.9% jump was also revised higher to 3.0%.
Separately, the Labor Department reported an unexpected decline in first-time unemployment claims. Initial jobless claims fell to 216,000 for the week ending November 22, dropping 6,000 from the prior week’s revised 222,000. Economists had projected a slight rise to 225,000.
On Tuesday, stocks began the session without clear direction but strengthened as the day progressed. All three major indexes finished higher, with the Nasdaq clawing its way back into positive territory after an early slump. The Dow climbed 664.18 points, or 1.4%, to 47,112.45. The S&P 500 added 60.76 points, or 0.9%, to 6,765.88, and the Nasdaq gained 153.59 points, or 0.7%, to 23,025.59.
These advances marked the third straight day of gains, helping offset the weakness seen earlier in November. Investors were encouraged by recent softer inflation signals, cautious commentary from Fed officials, and mixed but generally stabilizing economic data.
New data released earlier in the week showed retail sales grew less than projected in September, while producer prices matched expectations. Meanwhile, ADP reported that private-sector employers shed an average of 13,500 jobs per week in the four weeks ending November 8—sharply worse than the prior period’s 2,500 weekly job losses.
Consumer confidence also deteriorated. The Conference Board’s index dropped to 88.7 in November from a revised 95.5 in October, well below expectations for a smaller decline.
Despite the mixed backdrop, markets have grown more confident about the prospect of another Fed rate cut next month. According to CME’s FedWatch tool, expectations for a 25-basis-point cut jumped to 82.7% from 50.1% just a week earlier.
Several sectors posted strong gains on Tuesday. Homebuilders surged after the National Association of Realtors reported a surprise increase in pending home sales for October, lifting the Philadelphia Housing Sector Index by 4.2% to its highest close in almost a month.
Airline stocks also rallied, with the NYSE Arca Airline Index up 3.9%. Pharmaceutical, healthcare, and networking stocks saw notable strength as well, contributing to broad-based sector performance.