US stock futures rose during trading on Monday, as Wall Street prepared to enter a crucial week headlined by the Federal Reserve's final meetings of 2025.
Contracts linked to the Dow Jones Industrial Average recorded a positive movement of 0.1%, while contracts for the S&P 500 rose by 0.2%, and Nasdaq 100 contracts advanced by 0.3%.
This modest rise followed two consecutive weeks of gains for the major indices, with the S&P 500 rising 0.3% last week, the Dow Jones Industrial Average climbing 0.5%, and the Nasdaq Composite gaining 0.9%. A moderate reading of the personal consumption expenditures (PCE) price index for September helped bolster this positive trend, particularly as it showed a limited impact on core costs.
In the midst of a crucial week, with anticipation building for the Federal Reserve's final meeting of the year and pivotal labor market data, the need for proactive analytical tools is paramount. With InvestingPro now available in Arabic and offering up to 55% off for Cyber Monday, WarrenAI provides real-time analysis of the impact of growing expectations for a rate cut and internal disagreements within the central bank.
Awaiting the US Federal Reserve's decision
This week includes a series of important economic data releases, most notably the Federal Reserve's monetary policy meeting on Tuesday. Observers are awaiting the Fed's announcement on Wednesday, along with a press conference by Chairman Jerome Powell, amid growing confidence that an interest rate cut is now more likely.
Interest rate instruments show a significant rise in expectations, with markets now pricing in an 88% probability of an easing move at the next meeting, compared to less than 67% a month ago, according to data from the US Interest Rate Monitor available on Investing Saudi Arabia’s website.
Investors are also focused on the state of the labor market following last week's mixed data, with the delayed JOLTS report for October due on Tuesday to provide a clearer picture of hiring, resignations and layoffs.
Division within the Federal Reserve over the path of interest rates
After a series of cuts totaling more than one percentage point, Federal Reserve officials find themselves facing a difficult question about the appropriate interest rate level to stop at, especially with internal disagreements widening to an unprecedented degree.
Data published since 2012 indicates a widening gap between Federal Reserve members' estimates of the ideal interest rate level, demonstrating growing disagreement over the next rate cut and what follows.
Jerome Powell acknowledged that there were clear differences among committee members regarding the priority of price stability or employment support, reflecting a pivotal question about whether the economy needs more stimulus to support the labor market, or whether continued inflationary pressures and tariffs warrant a cautious approach to monetary easing.
This debate opens the door to a deeper question related to the point of equilibrium in monetary policy, i.e., the level that neither pushes the economy towards expansion nor leads to its slowdown.
This level is known as the neutral interest rate, and it is the ultimate goal of the current rate cut cycle. The Fed appears to be finding it increasingly difficult to pinpoint this level precisely, which is adding to the uncertainty in the markets.
This divergence reflects the complexity of the current economic landscape, where the effects of growth, employment, inflation, and trade tariffs intersect in shaping Federal Reserve members' expectations for the next phase.
Stay tuned for the results of major companies
Regarding business results, all eyes will be on Wednesday's quarterly results of both Oracle and Adobe, as they have a direct impact on market movements.
On Thursday, the results of Broadcom and Costco will be in the spotlight, with expectations that these results will play a pivotal role in either strengthening market trends or curbing their momentum during this crucial week.
