US Stocks Set to Gain as Fed Rate-Cut Bets Revive: Markets Wrap

US stocks were set to rise on Friday as the revival of Federal Reserve policy-easing bets pushed Treasury yields lower.

Author of the article:

Bloomberg News

Sujata Rao and Margaryta Kirakosian

Published Jan 17, 2025  •  3 minute read

u0)qlbapctcotq1i04v5podc_media_dl_1.png MSCI, Bloomberg

(Bloomberg) — US stocks were set to rise on Friday as the revival of Federal Reserve policy-easing bets pushed Treasury yields lower.

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Contracts on the S&P 500 rose 0.5%, with the underlying index poised for its biggest weekly gain since November’s election, while Nasdaq 100 futures advanced 0.8%. Truist Financial Corp. shares rose in premarket trading after its net income broadly met estimates. SLB, the world’s largest oil-services provider, also gained on plans to returnsat least $4 billion this year to shareholders. 

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Markets have steadied after their recent wobbles as data and comments from Fed officials suggest the central bank will have room to cut interest rates this year. Swap markets now expect some 40 basis points worth of rate cuts from the Fed in 2025, moving from not even pricing a single quarter-point move earlier this week.

Ten-year Treasury yields slipped three basis points lower on the day, taking them more than 15 basis points below recent multi-month highs.

“Even equity managers were more concerned over rates than earnings,” said Kevin Thozet, a member of the investment committee at Carmignac. “What we have had is reassuring data on this front — whether retail sales or inflation — hinting that the US economy may not be overheating. This has allowed for fixed income markets to take a bit of a breather.”

Investor focus is turning to President-elect Donald Trump’s inauguration on Monday and his plans for tariff hikes, tax cuts and mass deportation of undocumented migrants. 

“Key things to be aware of are whether Trump goes big from the very first day, coming up with executive orders and being very vocal,” Carmignac’s Thozet said. “He has been saying a multitude of things and we will see if he is more talking than acting.”

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Many market-watchers see a Trump presidency as broadly positive for Wall Street due to his protectionist agenda and proposals for lower corporate taxes. Bank of America Corp. strategist Michael Hartnett, for instance, said that US stocks are “protected by Trump” from downside, even though he doesn’t expect sharp gains.

Europe’s Stoxx 600 index also gained and was on course for its strongest week since September. Basic resources shares led the way after Bloomberg News reported that Glencore Plc and Rio Tinto Group held early-stage talks about combining their businesses. The news, alongside a weaker pound, helped London’s FTSE 100 hit a record high.

In currency markets, Bloomberg’s dollar index edged higher, as data continue to highlight the strength of the US economy relative to developed-market peers. The pound slipped as much as 0.6% to near the weakest level since November 2023, after a surprise drop in retail sales added to evidence of a struggling British economy. 

Corporate Highlights

• Truist Financial Corp. reported net interest income that was broadly in line with analyst estimates and gave a tempered projection for first-quarter revenue, according to a statement.
• PNC Financial Services Group Inc. and US Bancorp, the two biggest regional banks gave muted predictions for net interest income in the first quarter, amid uncertainty over how lower interest rates will revive lending demand.
• SLB, the world’s largest oil-services provider, plans to boost total returns to shareholders 21% this year to at least $4 billion as it gears for rising energy demand from artificial intelligence.
• JB Hunt shares drop in premarket trading after the transportation and logistics company reported fourth-quarter earnings per share that trailed consensus expectations.
• Fastenal shares slip in premarket trading, after results from the construction supplies company were slightly below expectations.
• Rio Tinto Group and Glencore Plc rose after Bloomberg News reported the two mining giants held early stage talks about combining their businesses.

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Key events this week:

• US housing starts, industrial production, Friday

Some of the main moves in markets: 

Stocks

• S&P 500 futures rose 0.5% as of 8:15 a.m. New York time
• Nasdaq 100 futures rose 0.8%
• Futures on the Dow Jones Industrial Average rose 0.5%
• The Stoxx Europe 600 rose 0.7%
• The MSCI World Index was little changed

Currencies

• The Bloomberg Dollar Spot Index rose 0.1%
• The euro was little changed at $1.0295
• The British pound fell 0.4% to $1.2186
• The Japanese yen fell 0.3% to 155.58 per dollar

Cryptocurrencies

• Bitcoin rose 2.7% to $102,799.95
• Ether rose 2.9% to $3,416.32

Bonds

• The yield on 10-year Treasuries declined five basis points to 4.57%
• Germany’s 10-year yield declined four basis points to 2.51%
• Britain’s 10-year yield declined six basis points to 4.62%

Commodities

• West Texas Intermediate crude fell 0.6% to $78.20 a barrel
• Spot gold fell 0.2% to $2,707.84 an ounce

This story was produced with the assistance of Bloomberg Automation.

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