Nov 25 (Reuters) - Dow contracts touched a record high on Monday and led gains among U.S. stock index futures, on investor optimism driven by Scott Bessent's nomination as Treasury Secretary in the incoming Trump administration.
President-elect Donald Trump ended weeks of speculation when he named his choice late on Friday, with some investment strategists saying Bessent could take measures to restrain further government borrowing, even as he follows through on fiscal and trade campaign pledges.
"The beauty of this nomination is that Bessent is a fiscal conservative. This sets the stage for more fiscal discipline, which the market is really going to welcome," said Joe McCann, CEO at Asymmetric in Miami.
Futures tracking the domestically focused small-caps index rose 1% as the yield on 30-year Treasury bonds led declines across the curve.
Yields on Treasury bonds had surged after Trump's victory on expectations that his policies, considered broadly positive for economic growth and large corporates, could stoke inflationary pressures and slow down the pace of the Federal Reserve's monetary policy easing.
"Bessent is seen as being less aggressive on tariffs than some of the rhetoric espoused by Trump. A fall in bond yields in response to his unveiling suggests some concerns about a new wave of inflationary pressures from import tariffs have eased," said Russ Mould, investment director at AJ Bell.
At 06:54 a.m., Dow E-minis were up 312 points, or 0.70%, S&P 500 E-minis were up 30.75 points, or 0.51% and Nasdaq 100 E-minis were up 118.5 points, or 0.57%.
Big banks gained, with Wells Fargo (WFC.N), up 1.1% and Morgan Stanley (MS.N), adding 1.2% in premarket trading, while popular 'Trump trade' Tesla (TSLA.O), rose 2.2%.
Among megacaps, Alphabet (GOOGL.O), and Amazon.com (AMZN.O), rose 0.8% and 0.9%, respectively.
The benchmark S&P 500 (.SPX), crossed 6,000 points for the first time days after the election verdict and has jumped more than 4% since Nov. 4. The Russell 2000 index (.RUT), has surged more than 8% during the same period and both indexes are near their respective record highs.
Brokerage Barclays raised its full-year 2025 forecast for the S&P 500 to 6,600 points from 6,500.
Expectations for what the U.S. Federal Reserve's policy move is likely to be in December, on the back of a resilient economy, have recently swayed between a pause and a cut. The CME Group's FedWatch Tool shows a near 56% probability the central bank will lower borrowing costs by 25 basis points.
The Personal Consumption Expenditure report, the central bank's preferred inflation gauge, will be on investors' radar this Thanksgiving week, along with the latest estimate on gross domestic product and minutes from the Fed's policy meeting earlier this month.
Crypto stocks such as MicroStrategy (MSTR.O), advanced 5.4%, MARA Holdings (MARA.O), rose 4.8% and Coinbase (COIN.O), added 1.4%, with bitcoin prices just shy of the $100,000 mark.
Peabody Energy (BTU.N), dropped 7% after Anglo American (AAL.L), decided to sell its remaining Australian steelmaking coal mines to the company for up to $3.78 billion in cash.
Retail trading platform Robinhood Markets advanced 3.9% after Morgan Stanley upgraded its stock to "overweight" from "equal-weight".
Reporting by Johann M Cherian and Purvi Agarwal in Bengaluru; Editing by Pooja Desai
