The major U.S. index futures are currently pointing to a moderately higher open on Monday, with stocks likely to add to the strong gains posted last week.
The markets may continue to benefit from recent upward momentum, which has propelled the Dow to new record highs. The Nasdaq and the S&P 500 have also reached their best levels in nearly two years.
The major averages have moved higher for seven consecutive weeks due in part to optimism about the outlook for interest rates.
The Federal Reserve reinforced the optimism with its monetary policy announcement last week, forecasting three interest rate cuts in 2024.
While some Fed officials have pushed back against the idea of imminent rate cuts, investors still widely expect the central bank to lower rates as early as March.
Later this week, the Commerce Department is due to release its report on personal income and spending in the month of November, which includes readings on inflation said to be preferred by the Fed.
After moving notably higher over the past several sessions, stocks turned in a relatively lackluster performance during trading on Friday. Despite the choppy trading, the Dow reached another new record closing high.
The Dow edged up 56.81 points or 0.2 percent to 37,305.16, closing higher for the seventh consecutive session. The Nasdaq also climbed 52.36 points or 0.4 percent to a nearly two-year closing high of 14,813.92, while the S&P 500 edged down 0.36 points or less than a tenth of a percent to 4,719.19.
The major averages all closed higher for the seventh consecutive week. While the Dow and the Nasdaq both surged by 2.9 percent, the S&P 500 jumped by 2.5 percent.
The choppy trading on Wall Street came as traders took a breather following the recent upward move by the markets.
Optimism about the outlook for interest rates has contributed to the recent strength on Wall Street, although hopes for near-term interest rate cuts were partly offset by comments from New York Federal Reserve President John Williams.
Williams told CNBC’s “Squawk Box” the Fed is not “really talking about rate cuts right now” and is focused on whether monetary policy is sufficiently restrictive to ensure inflation comes back down to 2 percent.
Nonetheless, the chances of a quarter point rate cut in March have jumped to 62.4 percent, according to CME Group’s FedWatch Tool.
On the U.S. economic front, the Federal Reserve released a report showing a modest rebound in U.S. industrial production in the month of November.
The report said industrial production rose by 0.2 percent in November after slumping by a downwardly revised 0.9 percent in October.
Economists had expected industrial production to climb by 0.3 percent compared to the 0.6 percent decrease originally reported for the previous month.
The rebound in industrial production came as manufacturing output increased by 0.3 percent in November after plunging by 1.2 percent in October following the resolution of strikes at several major automakers.
Housing stocks gave back ground after moving sharply higher over the past few sessions, with the Philadelphia Housing Sector Index falling by 1.9 percent after ending Thursday’s trading at a record closing high.
Significant weakness was also visible among utilities stocks, as reflected by the 1.7 percent loss posted by the Dow Jones Utility Average.
Commercial real estate, brokerage and natural gas stocks also saw notable weakness, while software stocks showed a strong move to the upside.