Stock Fever in the USA: Optimistic Mood Despite Political Uncertainty

U.S. stock index futures edged higher on Friday morning as the S&P 500 and Dow Jones were set to record their largest weekly gains since November. Investors are focusing on the upcoming political changes under the new Trump administration, which is set to take over the White House on Monday. Positive corporate earnings and signs of cooling inflation have encouraged risk appetite on Wall Street this week. The S&P 500 and Dow indices are facing their strongest weekly increases since the U.S. election in November. Particularly, bank stocks posted notable gains, with the S&P 500 bank index and regional banks rising by 5.8% and 6.4%, respectively. Among the companies scheduled to report their results before the market opens on Friday are Truist Financial, SLB, Fastenal, and State Street. Of the 28 S&P 500 companies that reported their quarterly results by Wednesday, an impressive 82.1% exceeded expectations. A decline in long-term bond yields, which had risen to over ten-month highs during the week, also fueled risk appetite. The yield on the ten-year U.S. Treasury note fell back to 4.6%, a low for more than a week. While investors are eagerly awaiting Trump's inaugural address, which could provide essential insights into his economic agenda, concerns remain that his trade policy plans could lead to trade conflicts and new inflationary pressures. Market observers expect the U.S. Federal Reserve to keep interest rates unchanged at its meeting later in the month, with the first rate cut expected in June. Before the market opens, investors are also evaluating new data on building permits, housing starts, and industrial production to assess the health of the U.S. economy. The Middle East is also in focus, as the Israeli cabinet could finalize a peace agreement. Among other activities, Salesforce rose by 1.9% after being upgraded by brokerage TD Cowen. Conversely, J.B. Hunt Transport Services fell by 9.8% after the company missed earnings expectations due to high expenses and a lower number of trucks.