U.S. stock futures buoyed by trade-deal hopes ahead of last session for dismal 2018

U.S. stock futures buoyed by trade-deal hopes ahead of last session for dismal 2018

2018 shaping up as worst year for major indexes since 2008

U.S. stock futures pointed to an upbeat final session of trade for 2018 on Monday, as investors drew inspiration from trade headlines pointing to hopes of progress between the U.S. and China.

How are benchmarks performing?

Dow Jones Industrial Average futures YMH9, +0.89%  climbed 241 points, or 1.1%, to 23,276, while S&P 500 futures ESH9, +0.77%  rose 23.5 points, or 0.9%, to 2,509.50 and Nasdaq-100 NQH9, +1.02%  futures jumped 70.25 points, or 1.1%, to 6,363.50.

Last week, major indexes managed the first weekly gain for all three indexes since the end of November. Friday’s back-and-forth session ended with a late push higher fizzling out, leaving the Dow Jones Industrial Average DJIA, -0.33% to settle down 0.3% to 23,062.40. The S&P 500 SPX, -0.12% finished off 0.1% and the Nasdaq Composite COMP, +0.08% eked out a 0.1% gain.

For the week, the S&P 500 logged a 2.9% rise, while the Dow rose 2.8% and the Nasdaq rallied 4%.

But with one session left to go, the Dow is looking at a drop of 1,656.82 points, or 6.7% for 2018, its biggest one-year point and percentage decline since 2008, while a quarterly loss of 12.83% is the worst since the first quarter of 2009. A monthly loss of 9.7% makes it the worst December since 1931 for the Dow and the biggest one-month percentage decline since February 2009.

The year is also shaping up as the worst since 2008 for the S&P 500, down 7%, and the Nasdaq Composite, off 4.6%.

What’s driving the market?

While Monday’s session may see thin volumes ahead of Tuesday’s New Year’s Day holiday, appetite for perceived riskier assets such as stocks could be getting a lift from trade headlines.

U.S. President Donald Trump tweeted Saturday that he and Chinese leader Xi Jinping had made “big progress” in a telephone discussion about trade, and that a deal was “moving along very well.” But sources close to the talks said Trump may be exaggerating progress in a bid to calm markets, according to The Wall Street Journal.

The report said the U.S. is pushing China to provide details of the proposals it made since the two leaders met in Buenos Aires on Dec. 1, such as opening up the country to foreign investors. Some in the Trump administration have expressed doubt that there will be meaningful progress unless Beijing lays out the exact changes it will make.

Fresh data from China showed manufacturing activity hit a two-year low, a sign of growing weakness for the world’s second largest economy.

A government shutdown is set to stretch into 2019, with both sides at a stalemate over border-wall funding, and most lawmakers away for the holidays.

What are analysts saying?

“Looking ahead into the first few weeks of the new year, we continue to believe the market will climb higher as tactical internal and sentiment extremes moderate, while sucking the optimists back in, before ultimately taking the next leg down in this bear market,” said Jeff deGraaf, chairman of Renaissance Macro Research, in a note. “We see a wide trading range of about 10%, with support [for the S&P 500] at 2,346 and resistance at 2,600.

How are other markets trading?

Oil prices rose along with stocks, with West Texas Intermediate crude pricesCLG9, +0.77%  up 1.3% to $45.90 a barrel. Gold prices GCG9, -0.05%  slipped, while the ICE Dollar Index DXY, -0.17%  was flat.

Most Asian markets were closed ahead of the New Year’s holiday and will remain shut Tuesday. Hong Kong’s Hang Seng Index HSI, +1.34%  rose 1.3%, and was looking at a near 14% loss for 2018, according to FactSet.

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