Stock Futures Rise Slightly to Begin 2025 Amid Uncertainty

As the new year begins, stock futures have risen slightly, with investors hoping that the market can regain the momentum that propelled it to log two-straight years of annual gains above 20%. However, uncertainty surrounding policy changes, geopolitical events, and economic data continues to cast a shadow over the market's outlook.

Futures tied to the Dow Jones Industrial Average rose 67 points, or 2%, while S&P 500 futures added 13 points, or 0.2%. Nasdaq-100 futures rose 56 points, or 0.3%. Despite the gains, investors remain cautious as they assess the potential impacts of new tariffs, immigration restrictions, and other policy changes proposed by the incoming administration.



One of the main concerns for investors is the potential impact of increased tariffs on consumer spending and economic growth. The Peterson Institute for International Economics (PIIE) estimates that a 10% increase in tariffs on all trading partners, combined with a 60% increase in tariffs on imports from China, would result in a lower growth but higher inflation scenario. This could lead to decreased consumer spending and slower economic growth, which in turn could negatively impact corporate earnings and stock performance.

Another factor weighing on investor sentiment is the deadly attack in New Orleans on New Year's Day, which is being investigated as a possible terrorist act. The Federal Bureau of Investigation has stated that the suspect, who drove a truck into a crowd, may not have been solely responsible for the incident, suggesting that there could be more to the story. This uncertainty and the possibility of further attacks could lead to a decrease in investor confidence, as people may become more cautious about putting their money into the market.

Additionally, the holiday-shortened week has been light on economic data, which could also contribute to a lack of clarity and confidence among investors. However, Thursday will bring a look at weekly jobless claims that will offer a read on how the labor market is faring.

Despite these concerns, some analysts remain optimistic about the market's prospects in 2025. The S&P 500 is expected to rise roughly 10% next year, according to a FactSet analysis of analyst estimates. However, analysts have underestimated the index in four of the last five years, including 2024, which suggests that the market may have more room to grow than currently expected.



In conclusion, while stock futures have risen slightly to begin 2025, investors remain cautious as they assess the potential impacts of policy changes, geopolitical events, and economic data. The market's outlook is uncertain, with both positive and negative factors at play. As the year progresses, investors will be closely watching the developments in these areas to determine the market's trajectory.