Holiday Markets: A Brief Respite Ahead
As the festive season approaches, investors can expect a shortened trading week, with markets closing early on Tuesday and remaining shut on Wednesday for Christmas. Last week’s Federal Reserve meeting brought some surprises, with the central bank cutting rates as anticipated, but scaling back its rate-easing plan for 2025.
A Mixed Bag: Market Performance and Economic Indicators
Despite the Fed’s move, major indices took a hit, with the Dow Jones Industrial Average falling 2.3%, the S&P 500 dropping 2.0%, and Nasdaq losing 1.8%. However, looking at the bigger picture, the Dow has gained 14% this year, the S&P has risen 24%, and the Nasdaq has surged 30%. Earnings season is just around the corner, with big banks set to report in mid-January.
Economic Calendar: Key Releases Ahead
This week, investors will be keeping a close eye on Consumer Confidence data, set to be released on Monday. Tuesday will bring Durable Goods Orders and New Home Sales reports. According to Argus Chief Economist Chris Graja, Durable Goods Orders are a key indicator to watch, as they could provide insight into the manufacturing economy’s strength. Graja notes that while consumer spending remains robust, industrial production has been a weak spot.
Fed’s Rate Cut: A Shift in Expectations
The Federal Reserve’s decision to lower the fed funds target rate by 25 basis points was widely expected, but its revised “dot plot” caught Wall Street off guard. The new forecast suggests only two rate cuts in 2025, down from the previous estimate of four. In response, Argus has adjusted its rate forecast, now predicting three 25-bps rate cuts in 2025.
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