U.S. stock futures were rising early Wednesday after taking a big leg down yesterday. President-elect Donald Trump and signs of stronger inflation are making traders jumpy at the start of 2025.
The biggest concern at present is what the Federal Reserve will do next. After reducing interest rates by a percentage point at the end of last year, traders are paring back expectations for more cuts in 2025, which is bad news for stocks. On Tuesday, economic data on the labor market and the services industry suggested economic growth is still robust, firms are still looking to hire, and they have scope to raise prices.
On top of that, Trump renewed talk of tariffs on Tuesday by saying he would penalize Denmark if it doesn’t hand over sovereignty of Greenland. Both levies on imports—which would fan inflation—and the geopolitical uncertainty could add to volatility this year. For now, though, the strength of the economy is probably good for company earnings.
