U.S. Stocks Surge Amid Fed Rate Cut Hopes

U.S. stock index futures climbed on optimism before a highly anticipated Federal Reserve rate cut. The focus is on Wednesday's rate decision and policymakers' projections for 2024. Stocks benefited from recent gains in AI-related shares and upcoming additions to the Nasdaq 100 index.

U.S. stock index futures made gains on Monday as investors anticipated a favorable Federal Reserve interest rate cut later this week, accompanied by key data releases that will influence future policy direction.

The Federal Reserve's final rate decision of the year is set for Wednesday, with markets pricing in a strong likelihood of a 25 basis point cut. However, the primary concern remains the Fed's outlook for the upcoming year, especially with the release of the updated 'dot plot' forecasts. While there's strong economic growth and persistent inflation, expectations for aggressive future rate cuts are tapering.

Market movements were reflected in premarket trading, where Dow E-minis, S&P 500 E-minis, and Nasdaq 100 E-minis rose, marking continued gains for stocks linked to artificial intelligence and pro-business policies of the incoming administration. Notably, MicroStrategy, Palantir, and Axon Enterprise saw gains with future inclusion in the Nasdaq 100 index.

(With inputs from agencies.)