Investing.com — Wall Street is seen opening the holiday-shortened week on a positive note, helped by a cooling of inflation pressures. Apple is expected to have a strong holiday season, while crude also heads higher. Elsewhere, Donald Trump has threatened to retake the Panama Canal, while UK growth flat-lined in the third quarter.
1. Apple set for strong holiday season – Wedbush
It may be worth investors keeping an eye on Apple (NASDAQ:AAPL) stock over the next few weeks as the iPhone maker is set to have a strong holiday season, according to Wedbush.
Apple has been integrating OpenAI’s ChatGPT into its devices, delivering a long-awaited feature ahead of the peak holiday shopping season, the company’s most lucrative sales period of the year.
“We believe Apple is set to have a strong holiday season ahead as iPhone 16 upgrades across its installed base are trending well into Christmas based on our recent Asia supply chain checks,” said analysts at Wedbush, in a note.
Importantly, Apple Intelligence has not rolled out in China or many other countries, the financial services firm said, with April the likely timetable for these AI launches along with a Chinese tech partner also named very soon to catalyze the timing of this rollout in this key region.
“We believe Apple is on pace to reach the $4 trillion market cap threshold by early 2025 and be the first member of this exclusive club,” Wedbush added.
2. Futures edge higher on holiday-shortened week
US stock futures edged higher at the start of a holiday-shortened week, with sentiment boosted by a benign reading on US inflation as well the aversion of a government shutdown.
By 03:45 ET (08:45 GMT), the Dow futures contract was up 90 points, or 0.2%, S&P 500 futures climbed 24 points, or 0.4%, and Nasdaq 100 futures rose by 128 points, or 0.6%.
Wall Street had rallied on Friday when the Federal Reserve’s preferred gauge of core US inflation printed lower than expected, and the optimism that this could mean more interest rate cuts next year has continued this week.
Fed funds futures swung to imply a 53% chance of a rate cut in March and 62% for May, though they only have two quarter-point easings to 3.75%-4.0% priced in for all of 2025.
Additionally, President Joe Biden signed a government funding bill on Saturday that averted a government shutdown, funding federal agencies at current levels for the next three months.
Still, despite Monday’s expected gains, analysts at BofA noted the S&P 500 was up 23% for the year, but if the 12 largest companies were excluded the gain was only 8%. They cautioned that such extreme concentration was a vulnerability going into 2025.
Trading is expected to be relatively muted during the week. The New York Stock Exchange closes early Tuesday for Christmas Eve and the market is shut on Christmas Day.
3. UK economy failed to grow in Q3
British economic output failed to grow in the third quarter, suggesting the Bank of England will have to cut interest rates again in 2025 even as policymakers fret about the level of inflation.
A preliminary estimate for the July-to-September period released by the ONS in November had shown gross domestic product growth at 0.1%, but the agency lowered the figure to 0.0% earlier Monday.
The ONS also cut its estimate of growth in the second quarter to 0.4% from a previous 0.5%.
The BoE last week kept borrowing costs on hold, after UK CPI rose by 2.6% in the 12 months to November, the highest level for eight months, from 2.3% in October.
It means inflation has been above the BoE’s target for two months in a row, and high wages growth highlighted the risks still posed by inflation.
However, the UK central bank also forecast that the economy will show zero growth in the fourth quarter, while one of the UK’s leading business groups, the CBI said its latest company survey suggested “the economy is headed for the worst of all worlds.”
The CBI, which claims to represent 170,000 firms, said companies expect to “reduce both output and hiring” and raise prices as a result of the tax rises announced in the government’s Budget.
The new Labour government warned of the dire state of the UK economy when it took power in the summer, before announcing tax increases for employers in a budget on Oct. 30.
4. Trump threatens to retake Panama canal
US President-elect Donald Trump threatened to re-establish US control of the Panama Canal on Sunday, another example of the incoming President’s penchant of attempting diplomacy with a clenched fist.
Trump accused Panama of charging excessive rates to use the Central American passage, which allows ships to cross between the Pacific and Atlantic oceans, telling supporters at an event in Arizona that the US was being “ripped off at the Panama Canal.”
He also said he was concerned over potential Chinese influence in the region, saying he would not let the canal fall into the “wrong hands.”
A Hong Kong-based company operates ports at the two ends of the canal, and China has offered to support investment in the region, but the waterway is controlled by a Panamanian government agency.
5. Oil starts week in positive territory
Crude prices edged higher Monday, with sentiment boosted by cooler than expected inflation data as well as US Senate passing legislation to end the brief shutdown over the weekend.
By 03:45 ET, the US crude futures (WTI) climbed 0.4% to $69.75 a barrel, while the Brent contract rose 0.4% to $72.83 a barrel.
President Joe Biden approved over the weekend a stop-gap spending bill approving government funding until March, ending concerns that a shutdown, especially during the holiday season, would disrupt travel and hurt fuel demand.
Oil markets were also supported by a cooling in price pressures, which opened the possibility of more Fed interest rate cuts next year, potentially boosting economic activity.
Both oil benchmarks fell more than 2% last week on concerns about global economic growth and oil demand.