S&P 500 Forecast: Can Bulls Maintain Momentum Ahead of Wednesday’s CPI Data?

Can Stocks Extend Their Record-Setting Rally?

Stock futures rose Monday as Wall Street sought to build on last week’s robust gains, with the S&P 500 and Dow Jones Industrial Average closing at all-time highs. The Dow surged above the 44,000 level for the first time, and the S&P 500 had its best week in nearly a year, driven by renewed investor confidence after the presidential election outcome. The rally spread broadly across sectors, with the Nasdaq and the small-cap-focused Russell 2000 also advancing.

At 14:14 GMT, Dow Futures are trading 44294.00, up 153.00 or +0.35%. S&P 500 Index Futures are trading 6042.50, up 17.25 or +0.29% and Nasdaq-100 Index Futures are trading 21300.25, up 69.00 or +0.32%.

What’s Driving Investor Confidence?james

The decisive re-election of Donald Trump helped ease market uncertainty, allowing investors to shift focus back to economic indicators and company performance.

Last week’s 1,500-point rally in the Dow on Wednesday was followed by the Federal Reserve’s announcement on Thursday to lower interest rates, adding another layer of support. Northern Trust’s investment chief Katie Nixon noted that with political uncertainties behind, investors are better positioned to focus on economic and corporate fundamentals.

With little economic data due Monday, investors are looking ahead to mid-week inflation data and corporate earnings from companies such as Live Nation and Aramark to gauge broader market health.

Which Stocks Are Leading the Charge?

Several stocks made substantial pre-market moves as traders anticipated policy shifts under the re-elected Trump administration. Tesla surged 7% pre-market, following a 29% gain last week that took its market value above $1 trillion, as investors foresee favorable conditions for the electric vehicle giant. Crypto stocks, including Coinbase and MicroStrategy, also saw pre-market gains of 15% and 11% respectively, as Bitcoin topped $82,000, reflecting optimism that Trump’s policies may support the crypto sector.

In healthcare, Cigna surged 8% after confirming it would not pursue a merger with Humana, while Humana’s shares fell by the same percentage. Cisco rose 1.6% after a JPMorgan upgrade, and Cboe Global Markets climbed 1.3% following a Deutsche Bank upgrade, with the bank forecasting steady growth in Cboe’s options and futures products as market volatility persists.

Will Inflation Data Shift Market Sentiment?

Last week, bond yields climbed sharply, with the 10-year Treasury note closing at 4.306% as the 2-year note hit 4.25%, reflecting inflation concerns and post-election market shifts. Traders are closely watching Wednesday’s inflation report, which will shape expectations for Federal Reserve policy. The Consumer Price Index (CPI) is forecast to rise 0.2% from the previous month and 2.5% year-over-year, with core inflation expected to hold steady. The Producer Price Index (PPI) is also expected to show moderate gains, providing further signals on inflation pressures.

What’s Next for Markets?

After last week’s rally, traders are cautiously optimistic heading into a week of key economic data and Federal Reserve commentary. While last week’s interest rate cut and Trump’s re-election have spurred upward momentum, inflation data and Fed Chair Jerome Powell’s speech on Thursday will be critical for shaping short-term expectations. Markets appear positioned for further gains, though any higher-than-expected inflation could temper the rally. Traders should remain vigilant as these developments unfold, with a continued bullish outlook if inflation data aligns with expectations.