Nasdaq & S&P 500 Futures Climb as Markets Anticipate December Rally, BoJ's Steady Policy Supports

On Tuesday, futures tracking major stock indices like the Nasdaq and the S&P 500 showcased a positive trajectory, hinting at what's popularly called a 'Santa Claus' rally. Market optimism was further lifted by the Bank of Japan's decision to stick with its expansive monetary stance, which is seen as favorable for continued investment.

Futures Signal Uptrend

Futures tied to the Nasdaq and S&P 500 hinted at a robust start to the trading day. This movement is part of the festive cheer in stock markets known as the 'Santa Claus' rally - often observed towards the end of December. Bank of Japan's commitment to its flexible monetary policy added fuel to the positive outlook, bringing a sense of early holiday cheer to the markets.

Reviewing Monday's Performance

U.S. stocks on Monday mostly trended upwards, with the S&P 500 and Nasdaq Composite ending the day on a higher note. The Nasdaq hit its highest mark since January 12, 2022, while the S&P 500 reached a level not seen since January 4, 2022. Although the Dow Industrials ended roughly flat, it still managed to close at a record high. Investors looking forward to possible interest rate cuts next year are stepping into riskier positions, injecting more capital into the markets. The communication services and consumer staples sectors led gains within the S&P, while others showed less pronounced movements.

Economic Data & Analyst Insights

Important economic data such as earnings reports and housing starts may guide trading decisions in the current week. Bond yields remained low, and crude oil has seen varied changes. Analysts have historically seen December as a pivotal month for stocks, often with more substantial gains in the latter half. This aligns with observations made by LPL Financial's Chief Technical Strategist Adam Turnquist, who notes the S&P 500's average December performance has been robust since 1950.

Pre-market trading showed upward moving ETFs, with the SPDR S&P 500 ETF Trust (SPY) and the Invesco QQQ ETF (QQQ) inching higher. Housing starts are predicted to slightly decline, while building permits might also see a dip. Speeches from Federal Reserve executives are also on the agenda and could shed light on future monetary policies.

On the global front, the Bank of Japan's decision has been welcomed, leading Tuesday's gains in most Asian markets. Crude oil retraced some gains, while European stocks edged up in what appeared to be less decisive trading sessions.

Stocks, Futures, Rally, Economy, Monetary