US equity futures moved cautiously higher on Tuesday as investors attempted to regain footing after a volatile start to December disrupted what is typically one of the strongest months for markets. After Monday’s risk-off pullback—triggered by renewed macro concerns, sharp crypto losses, and lingering uncertainty over Federal Reserve policy—the early recovery in futures signaled that investors are now reassessing whether conditions remain supportive of a year-end rally.

Futures Lift as Markets Attempt to Reset

S&P 500 futures rose 0.3 percent, Nasdaq 100 futures added 0.4 percent, and Dow Jones Industrial Average contracts climbed roughly 0.2 percent, partially reversing Monday’s declines. The rebound follows a day in which all three major indices snapped five-session winning streaks, disrupting November’s late-month momentum. The jittery tone reflected not only profit-taking but also growing questions about whether equity valuations—already stretched by heavy AI-driven enthusiasm—can sustain further upside without clearer signals from the Fed.

The tentative recovery is being fueled in part by resilient risk appetite, as investors refocus on catalysts that could revive the so-called Santa Claus rally. Historically, December delivers above-average returns, but the pattern is vulnerable when macro conditions become unstable.

Crypto Volatility Eases but Sentiment Remains Fragile

Bitcoin’s rebound above $87,000 helped restore some confidence after the token suffered its worst single day since March, plunging to nearly $84,000 on Monday. The renewed weakness in crypto has been closely watched by equity traders, given the asset’s growing correlation with broader risk sentiment. Shares of Coinbase and Robinhood—both down more than 4 percent on Monday—also steadied in early trading.

Market strategists warn that the crypto shock earlier this week underscores broader fragility in speculative segments of the market. With liquidity shaking and leveraged positioning unwinding, sentiment-sensitive assets are likely to remain volatile through year-end.

Rate Cut Expectations Anchor Market Psychology

Despite Monday’s turbulence, expectations for a December Federal Reserve rate cut remain largely unchanged. With the delayed flow of government data now resuming, investors are incorporating weak factory readings and softer manufacturing indicators into the policy outlook. Markets currently assign an 87 percent probability of a cut at the Fed’s Dec. 10 meeting—significantly higher than the expectations seen just two weeks ago.

The absence of major economic releases on Tuesday keeps attention focused on Thursday’s key inflation data, which will offer a crucial signal regarding the persistence of price pressures. Until then, rate expectations are likely to remain the market’s primary stabilizing force.

Corporate Developments Add a New Layer of Intrigue

Marvell Technology will report earnings after the closing bell, drawing fresh attention to the semiconductor sector. The stock traded higher pre-market after reports surfaced that the company is in advanced talks to acquire chip start-up Celestial AI in a multibillion-dollar transaction. CrowdStrike and Okta will also report Tuesday, offering additional insight into cybersecurity demand—an area that has remained robust despite broader tech-sector volatility.

Looking ahead, investors will watch whether Tuesday’s modest rebound can evolve into more durable momentum. With macro uncertainty still elevated and equity valuations sensitive to even small shifts in policy expectations, the market enters a critical stretch where data flow, central bank communications, and earnings developments will determine whether December resumes its historically favorable pattern.