With the U.S. presidential election in the rear-view mirror, Wall Street analysts are increasingly positive on U.S. stock futures, as the Federal Reserve mulls an interest rate hike in December.
Stock futures have been on an upswing of late. The benchmark S&P 500 E-Mini December 2016 contract, while down in Monday trading this week, is up 3.85% in the past 30 days, and is up 6.86% over the past year.
That's the scenario as economic indicators are strong in late 2016, with oil and metals markets gaining strength and corporate earnings rising.
"Futures are higher following stronger crude oil and metals markets," states Alan Bush, a commodity analyst with ADM Investor Services, in a November 21 research note. "Crude gains are linked to optimism that the Organization of Petroleum Exporting Countries will agree to reduce production at its meeting on November 30."
Bush adds that analysts are predicting third-quarter corporate earnings growth will be 2.6%, much higher than previous economists' expectations of a 1.6% decline.
"Thus, the long-term trend is higher for stock index futures," Bush notes.
Others agree, but note there are counter-balancing economic factors, as well. "Economic growth is accelerating again amidst a long, slow economic expansion," says Jason Pride. Glenmede's director of investment strategy. "But rising inflation, interest rates, and the dollar will be headwinds to the ongoing expansion."
But would stocks continue to rise if the Fed does hike rates?
Maybe not, at least in the short-term, says Larry Elkin, president of Palisades Hudson Financial Group in Scarsdale, N.Y. "Don't be surprised if financial markets, including stocks, bonds and currencies, react sharply and negatively to the Fed's decision," Elkin says.