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Investors are entering the week with a sense of optimism as U.S. stock index futures gain ground. The anticipated Federal Reserve interest rate cut later in the week, along with key data prints, will play a crucial role in shaping policy for the next year. The Fed's final rate decision of the year is due on Wednesday, and traders are pricing in a high likelihood of a 25 basis point rate reduction, as per CME's FedWatch. However, the main focus will be on policymakers' outlook for next year, with an updated "dot plot" of forecasts to be released. Bets on the pace of rate cuts are moderating amid strong economic growth and persistent inflation.

Analysts' Perspectives

Analysts at SEB believe that the Fed will not only cut rates by 25 basis points but also lower expectations of further rate cuts in the future. This indicates a cautious approach by the central bank in response to the current economic situation.During the week, a heavy data docket awaits investors. S&P Global's December flash manufacturing and services PMIs are scheduled for 9:45 a.m. ET on the day, along with industrial production figures, retail sales, and personal consumption expenditure data. These data releases will provide valuable insights into the health of the economy and help guide market expectations.

Stock Movements

At 7:05 a.m. ET, Dow E-minis were up 52 points, or 0.12%, indicating a positive start to the trading day. The S&P 500 E-minis were up 11 points, or 0.18%, and the Nasdaq 100 E-minis were up 65.75 points, or 0.30%. However, the benchmark S&P 500 and the blue-chip Dow ended the previous week lower, while the tech-heavy Nasdaq had its fourth straight week of gains after reaching the 20,000 mark for the first time.Shares of MicroStrategy rose 3.5% in premarket trading as the software company and bitcoin buyer is set to join the tech-heavy Nasdaq 100 index. Palantir and Axon Enterprise gained 0.4% and 2.3%, respectively, and will also be added to the reconstituted index, with the changes taking effect on Dec. 23. Super Micro Computer, which is set to be removed from the index, dropped 13.5%.

Cryptocurrency Impact

Cryptocurrency stocks saw a rise as bitcoin briefly jumped above $106,000 after Trump suggested the creation of a U.S. bitcoin strategic reserve similar to the strategic oil reserve. Coinbase Global rose 1.8%, and bitcoin miner MARA Holdings gained 2.3%. This shows the influence of cryptocurrency-related news on the stock market.

Corporate Actions

Honeywell International gained 3% after the industrial conglomerate announced that it is exploring a separation of its aerospace business. This move is expected to have implications for the company's future growth and valuation.Overall, the week ahead is expected to be filled with significant events and data that will impact the stock market. Investors will be closely watching the Fed's actions and the economic data to make informed investment decisions.