The major index futures indicate a higher opening on Monday, suggesting that stocks are set to build on the robust gains achieved in the previous week. Anticipation surrounding a possible U.S.-China trade agreement could stimulate initial buying activity in advance of the much-anticipated meeting between President Donald Trump and Chinese President Xi Jinping scheduled for later this week. Treasury Secretary Scott Bessent engaged with Chinese officials in Malaysia over the weekend, expressing confidence that the discussions have culminated in a “very successful framework” for Trump and Xi to deliberate on Thursday. Bessent also indicated he anticipates that China will recommence its purchases of U.S. soybeans and postpone the export controls on rare earths that have contributed to the recent escalation in tensions. En route to Japan, Trump conveyed a sense of optimism regarding the prospect of finalizing a trade agreement with China, following the signing of distinct trade and mineral accords with his counterparts from Malaysia and Cambodia.
Anticipation regarding the trajectory of interest rates could bolster initial gains in advance of the Federal Reserve’s monetary policy announcement this week. With the Fed widely anticipated to reduce rates by another quarter point when it reveals its latest decision on Wednesday, traders are expected to closely scrutinize the accompanying commentary for indications regarding the probability of additional rate cuts. Reports suggests a 96.7 percent probability that the Federal Reserve will reduce rates by a quarter point this week, alongside a 95.8 percent likelihood of an additional quarter point cut in December. Equities experienced a significant increase during trading on Friday, building on the upward momentum observed throughout Thursday’s session. The persistent upward trajectory has led to all major averages achieving new record closing highs. The major averages retraced from their peak levels as the day concluded, yet they still recorded substantial gains. The Dow increased by 472.51 points, reflecting a rise of 1.0 percent, reaching 47,207.12. The Nasdaq experienced a surge of 263.07 points, equivalent to a 1.2 percent gain, closing at 23,204.87. Meanwhile, the S&P 500 advanced by 53.25 points, marking a 0.8 percent increase, ending at 6,791.69. For the week, the S&P 500 increased by 1.9 percent, while the Dow and the Nasdaq rose by 2.2 percent and 2.3 percent, respectively.
The rally followed the publication of a closely monitored report on consumer price inflation, which bolstered confidence that the Federal Reserve will persist in reducing interest rates in the forthcoming months. Amid the indefinite postponement of most U.S. economic data due to the current government shutdown, the Labor Department has published a report indicating that consumer prices rose by a marginally lower amount than anticipated in September. The Labor Department reported that the consumer price index increased by 0.3 percent in September, following a rise of 0.4 percent in August. Analysts had anticipated that consumer prices would increase by an additional 0.4 percent. The report indicated that the annual rate of growth in consumer prices increased to 3.0 percent in September, up from 2.9 percent in August, although this was below the 3.1 percent rise anticipated by analysts. The core consumer price index, which excludes food and energy prices, increased by 0.2 percent in September, following a rise of 0.3 percent in August. Core consumer prices were anticipated to rise by an additional 0.3 percent. The Labor Department reported that the annual growth rate of core consumer prices decreased to 3.0 percent in September, down from 3.1 percent in August. Analysts had anticipated that the rate of expansion would stay consistent.
“Consumer inflation came in cooler in September, reinforcing expectations that the Fed will cut rates again at next week’s policy meeting,” stated Kathy Bostjancic. She stated, “We maintain our perspective that the Fed will reduce the fed fund rate by an additional 50bps by the end of the year, as the deterioration in the labor market surpasses worries regarding a slight increase in inflation primarily driven by tariffs.” Buying interest was also generated in reaction to upbeat earnings news from prominent companies such as Ford, Procter & Gamble, and Intel. Ford’s shares experienced a notable increase of 12.2 percent following the release of third quarter results that surpassed analyst expectations on both revenue and earnings. Procter & Gamble also advanced by 0.9 percent following the release of fiscal first quarter results that surpassed expectations. Meanwhile, Intel’s shares experienced a decline from their early peaks, yet still recorded an increase of 0.3 percent following the semiconductor giant’s announcement of third quarter sales that surpassed expectations. Computer hardware stocks continued their upward momentum from the prior session, as the NYSE Arca Computer Hardware Index increased by 3.2 percent, reaching a new record closing high. Significant robustness was evident in the banking sector, as demonstrated by the 2.1 percent increase in the KBW Bank Index. Stocks in the semiconductor, brokerage, and networking sectors exhibited notable strength, whereas gold stocks diverged from this upward trend, coinciding with a slight decline in the price of the precious metal.