‘Santa Rally’ stalls even though a December cut from the Fed is a near certainty

There is an 88% chance that the Fed will cut 0.25% off interest rates on Dec. 10, according to the rarely wrong CME FedWatch futures market, but that implied promise of a fresh round of cheaper money wasn’t enough to boost U.S. stock futures this morning. S&P 500 futures were down 0.64% premarket; Nasdaq 100 futures were down 0.78%.

The pessimism started in Asia, with Japan’s Nikkei 225 down 1.89% and the South Korea KOSPI down 0.16%. Europe was little better. The STOXX Europe 600 was down 0.21% in early trading and the U.K.’s FTSE 100 was down 0.14% before lunch.

It was all a stark contrast to Friday’s trading in the U.S., when the S&P closed up for its fifth straight session. The talk over the weekend was that this signaled the beginning of a “Santa Rally,” the myth that stocks do well in December as traders enjoy the jollity of the holiday season (and the Q4 corporate revenue picture becomes clearer).