Next Week's Highlights: Trump and the Fed as Key to Bull and Bear Trends

 

The weekly gains of the three major indexes were narrowed to within 1%. Analysts and traders said that some profit - taking trades and doubts about the market performance in January next year led to a sell - off in the stock market on Friday.

 

Robert Pavlik, a senior portfolio manager at Dakota Wealth, said, "There are concerns that there may be some repositioning and redistribution of funds in the first half of next year. Investors trading on Friday and next week may want to get a head start."

 

Looking ahead to next week, there are only two trading days left for the US stock market in 2024. As of Friday's close, the Dow Jones Industrial Average has risen 14% year - to - date, the S&P 500 Index has increased by 25%, and the Nasdaq Composite Index has climbed 31%. All are expected to record significant increases for the second consecutive year.

 

Currently, the US stock market is in a period known as the "Santa Claus Rally", which refers to the last five trading days of the year plus the first two trading days of the following year. Data shows that since 1950, the S&P 500 Index has a return rate of 1.3% during these seven days.

 

However, whether the upward momentum can continue and for how long will depend on various forces that may drive the market in 2025. Next week, S&P Global and ISM will successively release manufacturing PMI reports, which may provide investors with new insights into the health and strength of the US economy.

 

In addition, every move of President - elect Trump of the United States affects the financial market. The market is also speculating on which policies he will introduce first after his inauguration on January 20th, covering a series of issues from immigration, energy, and cryptocurrencies to the Middle East situation and the Russia - Ukraine conflict.

 

Michael Rosen, the chief investment officer of Angeles Investments, said, "People hope that the US tax and regulation can be reduced or eased next year, which will help support corporate profits. After all, corporate profits are the fundamental factor driving the stock market."

Helen Given, the deputy director of trading at Monex USA, said that the coming - into - power of a new government always brings a great deal of uncertainty.

 

 

In addition, the Federal Reserve's first monetary policy meeting in 2025, scheduled for the end of January, may also pose a challenge to the rise of the US stock market. Early next Saturday morning Beijing time (next Friday in Eastern US time), Thomas Barkin, the president of the Federal Reserve Bank of Richmond, will deliver a speech.

 

In the energy market, with the conclusion of the OPEC+ meeting, the continuous production cuts will make it difficult to widen the supply - demand gap in the short term. However, the Federal Reserve and the European Central Bank have recently released hawkish signals, and the US dollar is relatively strong in the short term, exerting some pressure on oil prices.

 

 

Monday: US December Chicago PMI, US November Pending Home Sales Index MoM, US December Dallas Fed Business Activity Index

 

Tuesday: US October FHFA House Price Index MoM

 

Wednesday: US and European stock markets are closed for New Year's Day

 

Thursday: Eurozone December Final Manufacturing PMI, UK December Final Manufacturing PMI, US Initial Jobless Claims for the week ending December 28th, US December Final S&P Global Manufacturing PMI, US November Construction Spending MoM

 

Friday: US EIA Crude Oil Inventories for the week ending December 27th, US December ISM Manufacturing PMI

 

Saturday: Thomas Barkin, President of the Federal Reserve Bank of Richmond, gives a speech