Stock Futures Drift in Cautious Start to Fed Week: Markets Wrap
(Bloomberg) — Stocks nudged higher at the start of a week in which investors will search for clues on next year’s interest-rate path as they look beyond an all-but-certain cut at the Federal Reserve’s final meeting of 2025.
S&P 500 futures rose less than 0.1% after the benchmark closed within touching distance of an all-time high. Netflix Inc. climbed 1.5% in premarket trading after US President Donald Trump raised potential antitrust concerns on its planned takeover of Warner Bros. Discovery Inc. Nasdaq 100 contracts advanced 0.2%.
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US stocks have rebounded in recent weeks to approach an October record after some Fed officials signaled that they intend to deliver a cut on Wednesday. Still, the advance has been jittery as uncertainty over the pace of easing in 2026 and wariness about the durability of an AI-driven rally keep sentiment in check.
Unease that inflation remains too high has also caused divisions among Fed officials in a rift that’s been exacerbated by the lack of fresh data during the shutdown. After a probable cut on Wednesday, money markets are now leaning toward two more by the end of 2026, down from three barely a week ago.
While a resilient economy, seasonal support and catch-up positioning are supporting stocks, key risks still loom for investors, said Daniel Murray, deputy chief investment officer and global head of research at EFG Asset Management.
Those include “that the Fed is less dovish than investors currently assume,” Murray said, along with “a delayed tariff impact that sees inflation higher for longer and cracks starting to widen in the labor market.”
Europe led declines in global bond markets after the European Central Bank’s Isabel Schnabel became the first senior official to suggest with any certainty that European rates have reached a floor. US Treasuries extended losses, with the 10-year yield rising two basis points to 4.15%.
US bonds have been on the back foot of late, closing out their worst week in eight months last weeks amid jitters over the pace of cuts next year. Economic data and officials’ comments suggest this week’s decision is unlikely to be unanimous, with dissent expected from both hawks and doves.
“The tone of Chair Powell’s press conference and accompanying statement will be critical,” wrote Deutsche Bank AG strategist Jim Reid. “We expect Powell to emphasize that the hurdle for further cuts in early 2026 is high, signaling a near-term pause. This guidance will be key to maintaining credibility.”
For stocks, interviews with 39 investment managers across the US, Asia and Europe showed that a vast majority of allocators were still positioning for a risk-on environment through next year. The thrust of the bet is that resilient global growth, further developments in artificial intelligence, accommodative policy and fiscal stimulus will deliver outsize returns.
Fabien Benchetrit, head of target allocation for France and southern Europe at BNP Paribas Asset Management, said he remains bullish on 2026 but isn’t planning to increase his stock exposure before year-end.
“Like other market participants, we’ve had a good year and it doesn’t make much sense to do it when liquidity typically dries up in the last two weeks of December,” he said. “In terms of AI, 2025 was all about capex, but 2026 will be about these investments delivering revenues, profits and productivity gains.”
In Asian markets, shares in mainland China led gains as the Communist Party’s Politburo made boosting domestic demand its top priority for next year.
Japanese bond yields rose across the curve after data showed that the economy shrank in the three months through September, giving some justification for Prime Minister Sanae Takaichi’s stimulus package announced last month. The figures add an element of complexity to the Bank of Japan’s policy decision next week, but likely won’t derail it from its gradual hiking path.
Corporate News
Shares in CRH Plc., Carvana Co. and Comfort Systems USA Inc. rallied in premarket trading after S&P Dow Jones Indices said they will join the S&P 500 Index before trading opens Dec. 22. US President Donald Trump raised potential antitrust concerns around Netflix Inc.’s planned $72 billion acquisition of Warner Bros. Discovery Inc., noting that the market share of the combined entity may pose problems. Unilever Plc’s spinoff The Magnum Ice Cream Co. was valued lower than some analysts expected in its debut on Monday, as the world’s biggest ice cream company looks to revive its performance as a standalone firm. Pop Mart International Group Ltd. shares dropped the most in over six weeks amid renewed concern that the Chinese toymaker’s US sales growth momentum is slowing. Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 6:44 a.m. New York time Nasdaq 100 futures rose 0.2% Futures on the Dow Jones Industrial Average were little changed The Stoxx Europe 600 was little changed The MSCI World Index was little changed Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1652 The British pound was little changed at $1.3318 The Japanese yen fell 0.1% to 155.53 per dollar Cryptocurrencies
Bitcoin rose 1.9% to $91,936.18 Ether rose 1.9% to $3,144.58 Bonds
The yield on 10-year Treasuries advanced two basis points to 4.15% Germany’s 10-year yield advanced four basis points to 2.84% Britain’s 10-year yield advanced four basis points to 4.51% Commodities
West Texas Intermediate crude fell 1.1% to $59.43 a barrel Spot gold rose 0.4% to $4,213.18 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Joe Easton and Julien Ponthus.
©2025 Bloomberg L.P.
