Dow and Nasdaq futures surge on optimism over potential Federal Reserve rate cuts and progress in the US-China trade deal.

U.S. stock futures extended their rally on October 26, with major indexes advancing on renewed investor optimism driven by expectations of Federal Reserve rate cuts and easing U.S.-China trade tensions.

Futures continued to show strength heading into the new trading week on October 27. Dow Jones Industrial Average futures climbed about 290 points, or 0.6%, while S&P 500 futures rose roughly 0.7%, and Nasdaq 100 futures gained nearly 0.9%.

Technology stocks led the advance, with major players such as Microsoft, Alphabet, and Meta set to report their earnings later this week.

The Federal Reserve, which delivered its first rate cut since December 2024 in September—reducing the federal funds rate by 25 basis points to a range of 4.00% to 4.25%—is widely expected to ease policy further. Markets are anticipating another 25 basis point cut at the upcoming Federal Open Market Committee (FOMC) meeting on October 29, as the central bank aims to support a cooling labor market while inflation remains above its 2% target. Inflation in September rose slightly to 3.0%, up from 2.9% in August.

The major averages are coming off a strong week, with all three benchmarks closing at record highs last Friday. The Dow gained about 1%, or 472.51 points, the S&P 500 added 0.79%, and the Nasdaq Composite advanced 1.15%.

Overall, analysts remain cautiously optimistic, noting that steady inflation data and solid corporate earnings continue to fuel bullish sentiment. The Fed’s upcoming policy decisions will remain central to market direction as investors assess the balance between sustaining economic growth and containing inflation.