Investing.com -- US stock index futures traded marginally higher Tuesday in thin trading ahead of the Christmas holiday, stabilizing after gains from the world’s largest technology stocks.
At 05:20 ET (10:20 GMT), Dow Jones Futures gained 10 points, or 0.1%, S&P 500 Futures were up 6 points, or 0.1%, and Nasdaq 100 Futures edged 40 points higher, or 0.2%.
The New York Stock Exchange is set to close early Tuesday for Christmas Eve, and the market is shut on Christmas Day.
Wall Street indexes closed higher on Monday led by a surge in semiconductor stocks that gave tech a strong start to the holiday-shortened week.
The S&P 500 gained 0.7%, the Dow Jones Industrial Average rose 0.2% and the NASDAQ Composite climbed 1%, with the tech megacaps, Nvidia (NASDAQ:NVDA), Meta Platforms (NASDAQ:META) and Tesla (NASDAQ:TSLA) all rising substantially.
Wall Street recovers from Fed-induced slump
The main indices have started the holiday-shortened week on a positive note, bouncing after the Federal Reserve projected fewer-than-expected cuts in 2025 last week. This had led to sharp falls in all three major indexes and a weekly decline on Wall Street.
The Fed signaled a cautious approach to monetary policy adjustments, emphasizing the need for continued progress on inflation before considering further rate cuts.
Markets scaled back rate cut expectations after the Fed meeting, pricing in just two more cuts in the upcoming year.
However, sentiment improved on Friday after (PCE) price index—the Fed’s preferred measure of inflation—rose at a slower-than-expected pace in November.
Although the recent data indicates a cooling trend, the persistent elevation above the 2% target suggests that inflationary pressures are not yet fully contained.
Clients continue to buy US equities - BofA
BofA Securities stated its clients continued to buy US equities for the seventh straight week. Specifically, inflows reached $10 billion – the second-largest amount since 2008 and the biggest since January 2017.
Similar to recent weeks, purchases were spread across both individual stocks and exchange-traded funds (ETFs), with stronger inflows directed toward single stocks. Large-cap stocks saw the bulk of the buying activity, while small caps experienced more subdued inflows.
Institutional and retail investors increased their equity holdings for another week – the third for institutions and the second for retail clients. In contrast, hedge funds were net sellers for the second consecutive week.
The rolling four-week average of inflows from institutional clients hit its highest point in nine months, reflecting a typical pattern of renewed buying activity following October’s tax-loss selling by mutual funds.
“Private clients typically are big sellers in December amid tax loss selling vs. big net buyers in January. While this group has been a buyer of ETFs this month, it has sold single stocks, though slightly less so than in the average December,” BofA strategists led by Jill Carey Hall noted.
Crude gains ahead of Xmas break
Crude prices edged higher Tuesday, stuck in a tight trading range ahead of the Christmas holiday period.
At 05:20 ET, the US crude futures (WTI) climbed 0.6% to $69.64 a barrel, while the Brent contract rose 0.6% to $72.75 a barrel.
Despite these gains, both benchmarks were down as much as 5% in 2024, with persistent concerns over slowing demand in China, the world’s largest oil importer, being a key point of pressure.
Both OPEC and the IEA have forecast slower demand growth in 2025 due to slowing demand in China. The country is also expected to face increased economic headwinds from a renewed trade war with the US under the new Donald Trump-led administration.
Oil markets were also on edge over a potential supply glut in 2025, with US oil production close to record highs, and Trump vowing to ramp up domestic energy production, as well as OPEC likely to increase production at some point in 2025.
US inventory data, from the American Petroleum Institute, is due later in the session.
(Ayushman Ojha contributed to this article.)