Market Outlook: A Mixed Bag Ahead of the Holidays
As the short trading week gets underway, investors are grappling with the Federal Reserve’s recent hints about interest rates staying higher for longer. The uncertainty has led to a mixed performance in stock futures, with the S&P 500 hovering around the flatline, while the tech-heavy Nasdaq has edged up 0.3%. Meanwhile, Dow Jones Industrial Average futures have slipped 0.3%.
A Volatile Week Comes to a Close
Last week was a rollercoaster ride for Wall Street, with all three major averages surging over 1% on Friday, but ultimately ending the week down around 2%. The Fed’s decision to slow down rate cuts sparked a sell-off on Wednesday, making it one of the worst days of the year. However, the latest Personal Consumption Expenditures index showed inflation cooling, albeit with some lingering stickiness.
Fed’s Rate Hike Path Remains Uncertain
Despite the Fed’s preferred inflation gauge indicating further cooling, one dissenting voice argued that there is still more work to be done on the inflation front. As a result, investors are currently betting on the Fed holding rates steady next month, with a 50-50 split on a cut versus a hold for the subsequent meeting in March.
A Breather Ahead of 2025
This week’s light economic schedule provides a welcome respite for Wall Street to digest and reflect on the year ahead. Markets will close early on Tuesday, followed by the Christmas holiday on Wednesday. The Conference Board Consumer Confidence index for December is the only notable economic data release on the horizon.
Catch Up on the Weekend’s Top Stories
- Wall Street reevaluates the implications of “higher for longer” interest rates
- Bitcoin posts its first weekly decline since Trump’s election win
- Honda stock surges as Nissan merger talks formalize
- Elon Musk targets the “overstaffed” Fed in his quest for efficiency
- Biden launches a new US trade probe into legacy Chinese chips
- The Container Store files for Chapter 11 bankruptcy
- Novo rises as the 2025 obesity drug market gains traction
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