Stock market outlook: S&P 500 could hit 7,000 this week, while Trump teases Fed chair pick

Meanwhile, the coming week could see President Donald Trump nominate a successor to Federal Reserve Chairman Jerome Powell, and a special election in Tennessee could further narrow the GOP’s House majority.

Futures tied to the Dow Jones industrial average fell 48 points on Sunday, or 0.1%. S&P 500 futures were down 0.13%, and Nasdaq futures slipped 0.12%.

The yield on the 10-year Treasury rose 1.3 basis points to 4.032%. The U.S. dollar was down 0.04% against the euro and down 0.15% against the yen. 

Gold rose 0.1% to $4,259.50 per ounce. U.S. oil futures climbed 1.55% to $59.46 a barrel, and bitcoin dipped 0.39% to $90,450.

On Saturday, market veteran Ed Yardeni pointed out in a note that the S&P 500 had crossed back above its 50-day moving average, and backed his view for the broad market index to hit 7,000 by year’s end, surpassing the record high of 6,920.

“The S&P 500 would need to rise by just 2.2% to reach 7,000,” he added. “That could happen this coming week, in our view.”

Considering the S&P 500 jumped nearly 4% in a trading week shortened by the Thanksgiving holiday, a 2.2% gain isn’t much of a stretch.

The market’s rebound was fueled by hopes that another rate cut later this month is still on the table, after some hawkish policymakers previously hinted at a wait-and-see stance.

But Trump could further stoke more dovish views if he reveals who is choice will be to take over as Fed chair when Powell’s term expires in May.

“I know who I’m going to pick as Fed chair. I will announce it soon,” Trump told reporters on Sunday.

He declined to confirm if Kevin Hassett, director of the National Economic Council, will be the one. But odds on prediction markets have soared in his favor, with Kalshi showing a 66% probability that Hassett will be nominated.

That’s added to expectations of more easing at the Fed’s Dec. 9-10 meeting, and CME’s FedWatch tool shows investors see 87% odds for a quarter-point cut.

Meanwhile, voters will decide on Tuesday who will fill a vacancy in a deep-red Tennessee congressional district. Republican Matt Van Epps and Democrat Aftyn Behn are in a tight race, according to some polls, despite Trump winning the district in a landslide last year.

Lots of money and several national figures are converging on the race. A win by Behn would further narrow the GOP’s already-slim majority and make affordability a higher priority in Congress.

After Democrats made stunning gains during off-year elections on the issue, another win could add urgency to efforts to extend enhanced Affordable Care Act subsidies to prevent insurance premiums from spiking next year.