Equities Advance as Traders Position for a Potential Year-End Surge

US equity futures held steady on Thursday, supported by firm gains across Asian and European markets as traders continued to position for a Federal Reserve rate cut that many expect will fuel a global rally heading into the final stretch of the year.

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After rising in seven of the past eight sessions, the S&P 500 was on track for a relatively quiet opening. Europe’s Stoxx 600 advanced 0.4%, boosted by strength in auto and retail stocks. Meanwhile, Asian benchmarks climbed to their highest level in more than two weeks, helped by solid moves in major Japanese players, including SoftBank Group Corp.

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Global bond markets, however, saw renewed weakness as yields continued drifting higher particularly in Japan. Sentiment shifted after several senior government officials suggested they would not stand in the way of a potential Bank of Japan rate increase this month.

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That commentary erased momentum from an earlier upswing driven by a robust 30-year Japanese government bond auction. In the US, 10-year Treasury yields edged up two basis points to 4.08%. Bitcoin remained comfortably above $93,000, while the US dollar traded in a narrow range.

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Optimism around potential Fed rate cuts has powered a broad comeback across risk assets after a difficult November. Investors have been rotating into defensive groups and other underowned sectors as concerns linger about stretched valuations in mega-cap tech. The small-cap Russell 2000 is now within reach of a record, while the tech-heavy Nasdaq 100 sits roughly 2% below its all-time high.

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“We expect leadership to broaden as previously lagging sectors start to catch up,” said Amelie Derambure, senior portfolio manager at Amundi SA in Paris. “Because the Russell is highly sensitive to interest-rate expectations, the most recent numbers strengthened the view that the Fed can lower rates without risking a recession.”

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Tech stocks were mostly steady in early premarket action. Six of the Magnificent Seven megacaps posted modest gains, with Apple Inc. being the lone exception. Salesforce Inc. rose after signs that clients are rapidly adopting its artificial intelligence offerings. Even so, Nasdaq 100 futures lagged behind contracts tied to the S&P 500.

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A new report from Challenger, Gray & Christmas Inc. signaled further cooling in the US labor market. The outplacement firm said announced job cuts fell in November following October’s jump, though layoffs were still the highest for any November in three years.

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With government labor reports delayed, investors have increasingly relied on private data, much of which points to hiring pressure as companies trim expenses and consumers moderate spending. Later in the day, economists expect first-time jobless claims to edge slightly higher.

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Concerns about employment combined with expectations that President Donald Trump could appoint a Fed chair aligned with his preference for looser monetary policy have shifted futures pricing toward the possibility of up to four interest-rate reductions through 2026. Even so, analysts generally believe that a resilient US economy should allow easier policy to remain supportive of equities.

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“Retail momentum stocks and crypto are still far from their recent highs, although both have bounced after the latest pullback,” wrote Mohit Kumar, chief economist and European strategist at Jefferies. “We expect sentiment to stay constructive through year-end.”

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