U.S. stock index futures climbed on Monday on higher odds of presidential candidate Donald Trump winning a second term after surviving an assassination attempt. At the same time, interest-rate cut hopes continued to lift sentiment.
Under Trump, markets expect hawkish trade policy and looser regulation over issues from climate change to cryptocurrency.
Online betting site PredictIt showed bets of an election win for Trump at 67 cents, up from Friday’s 60 cents, with Joe Biden at 28 cents.
“Trump as President is likely a positive for risk … we should see S&P 500 futures and the USD push higher today,” said Chris Weston, head of research at Pepperstone.
The dollar and some Treasury yields rose on Monday.
“It’s the promise of de-regulating U.S. industries which should be the big equity kicker.”
The Trump-linked stocks soared in premarket trading. Trump Media & Technology Group was one of the most actively traded stocks and jumped 48.8%, while software firm Phunware and video-sharing platform Rumble jumped 39.6% and 10.9%, respectively.
Crypto stocks also leapt as bitcoin rose to a two-week high. Coinbase Global, Marathon Digital holdings and Riot Platforms advanced around 6% each.
Other stocks that are expected to benefit from Trump’s second term also climed, with Gunmaker Smith & Wesson and prison operator GEO Group gaining 4.1% and 8.2%, respectively.
The gains followed Friday’s strong rally when the Dow and the S&P 500 touched intraday record highs as investors upped bets on a September rate cut after cooler-than-expected inflation data.
Futures tracking the Russell 2000 jumped 1.1%. The small-cap index, which has severely lagged Nasdaq and S&P 500 this year, notched its best week since November on Friday.
Traders now see 94% odds of a 25-basis-point rate cut by September, pricing in two cuts for 2024. The Fed’s last set of economic projections had showed only one rate cut this year.
As the quarterly corporate earnings season ramps up this week, it remains to be seen if megacaps can justify their high valuations.
Goldman Sachs’ second-quarter profit more than doubled. However, the lender’s shares were choppy after initial gains.
This comes after some big banks on Friday reported a healthier deal pipeline and higher investment banking activity, but also cited some reasons for caution.
Comments from Federal Reserve Chairman Jerome Powell and San Francisco Fed President Mary Daly, expected later on Monday, will be parsed for clues on their assessment of last week’s inflation data.
At 7:30 a.m. ET, Dow e-minis were up 244 points, or 0.61%, S&P 500 e-minis were up 28.25 points, or 0.5%, and Nasdaq 100 e-minis were up 121.25 points, or 0.59%.
Apple (AAPL) advanced 2% after Morgan Stanley added the iPhone maker’s stock to its “top pick” list, while Tesla jumped 4%.
BlackRock rose 1.1% after the world’s largest money manager’s assets hit a record high and profit grew 9% in the second quarter.
