S&P 500 futures were up a solid 0.42% this morning before the opening bell in New York, after the index added 0.88% in its Friday session. The Christmas week is—obviously—often a quiet one with thin trading and low volatility. Traders are focused more on positioning for 2026 than they are on the week ahead, and so far they appear to like what they are seeing for the year ahead.
We may even see a new all-time high—the S&P is just less than 1% from its previous record peak.
Two big reasons for that are the Fed and President Trump.
Most recently, the U.S. Federal Reserve delivered a cut in interest rates of 25 basis points, bringing the base rate down to 3.5%. Cheaper borrowing costs usually result in more money flowing into equities. Traders are not expecting another interest rate cut in January, but 46% of them are now pricing in one for March, according to the CME FedWatch tool, which tracks bets on Fed funds futures. That number has been ticking up gradually all month.
