U.S. equity futures pointed to a positive open on Monday, with markets poised to extend last week’s strong gains amid renewed optimism about progress in trade negotiations between Washington and Beijing.
Investors are anticipating a key meeting later this week between U.S. President Donald Trump and Chinese President Xi Jinping, which could pave the way for a trade agreement.
Treasury Secretary Scott Bessent met with Chinese officials in Malaysia over the weekend, saying the discussions produced a “very successful framework” that will form the basis of talks between Trump and Xi on Thursday. Bessent also said he expects China to resume purchases of U.S. soybeans and delay export restrictions on rare earths, both of which have fueled recent tensions.
Trump, speaking en route to Japan, also expressed confidence in reaching a deal following new trade and mineral agreements with Malaysia and Cambodia.
Optimism about monetary policy is adding to the bullish mood. The Federal Reserve is expected to cut rates by 25 basis points at its Wednesday meeting. Traders will closely watch the accompanying statement for hints on whether additional rate cuts are on the table.
According to CME Group’s FedWatch Tool, there’s a 96.7% probability of a quarter-point rate cut this week and a 95.8% chance of another in December.
Markets rallied strongly on Friday, with major U.S. averages notching record closes. The Dow Jones Industrial Average jumped 472.51 points, or 1.0%, to 47,207.12; the Nasdaq Composite climbed 263.07 points, or 1.2%, to 23,204.87; and the S&P 500 gained 53.25 points, or 0.8%, to 6,791.69.
For the week, the S&P 500 rose 1.9%, while the Dow and Nasdaq advanced 2.2% and 2.3%, respectively.
The rally followed cooler-than-expected inflation data, which reinforced expectations of continued Fed easing. Although much economic data remains delayed due to the U.S. government shutdown, the Labor Department reported that consumer prices rose 0.3% in September, slightly below forecasts of 0.4%. Annual inflation ticked up to 3.0%, also below expectations. Core inflation rose 0.2% month-on-month and slowed to 3.0% year-on-year.
“Consumer inflation came in cooler in September, reinforcing expectations that the Fed will cut rates again at next week’s policy meeting,” said Kathy Bostjancic, Chief Economist at Nationwide.
She added, “We remain of the view that the Fed will cut the fed fund rate by another 50bps by year-end as the weakening in the labor market outweighs concerns about moderately higher inflation stemming mostly from the tariffs.”
Earnings also supported the market. Shares of Ford Motor Company (NYSE:F) jumped 12.2% after reporting better-than-expected third-quarter results. Procter & Gamble (NYSE:PG) gained 0.9% after beating fiscal Q1 estimates, while Intel Corporation (NASDAQ:INTC) rose 0.3% despite paring early gains.
Computer hardware names led the rally, with the NYSE Arca Computer Hardware Index surging 3.2% to a record close. Bank stocks also advanced, reflected in a 2.1% jump in the KBW Bank Index, while semiconductor, brokerage, and networking sectors showed notable strength. Gold stocks lagged as precious metal prices slipped modestly.
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