Global Highlights This Week: US Q3 GDP to Be Released – Can US Stocks Stage a "Santa Claus Rally" Again?
With Christmas around the corner, Wall Street did not feel much festive cheer as the previous week kicked off. Both the S&P 500 and the Nasdaq fell last month, with the stock market experiencing an unusually weak period.
In recent weeks, two major themes have triggered sharp fluctuations in US stocks: first, the market’s growing scrutiny of enterprises’ huge spending on artificial intelligence (AI) infrastructure construction; second, changes in investors’ expectations regarding the Federal Reserve’s further interest rate cut path in 2026.
Earlier last week, doubts surrounding an Oracle data center project weighed on tech stocks and other AI-related shares, while the moderate inflation data released on Thursday boosted the stock market.
The S&P 500 edged up 0.1% last week, the Nasdaq rose 0.5%, and the Dow Jones Industrial Average fell 0.7%.
Angelo Kourkafas, senior global investment strategist at Edward Jones, said: "The economic data last week further consolidated the market’s expectation that the Federal Reserve will maintain a dovish stance on interest rate cuts."
He added that although some investors may choose to lock in profits after a strong year in the coming days, bringing some selling pressure, the latest data "is likely to give the green light for the 'Santa Claus Rally' to occur this year."
According to the *Stock Trader's Almanac*, since 1950, the "Santa Claus Rally" has typically occurred during the last five trading days of the year and the first two trading days of January the following year, during which the S&P 500 has recorded an average gain of 1.3%. This year, this window period starts on Wednesday and lasts until January 5.
The term was coined by Yale Hirsch of the *Stock Trader's Almanac* in 1972.
However, some analysts pointed out that if the recent trading trend continues, the market may continue to weaken at the end of the year rather than stage a rebound.
With Christmas and the New Year holiday approaching, the macroeconomic data this week will be relatively light.
Market attention will focus on the release of a small number of US economic data, especially the GDP data. After the recent government shutdown caused the delay in the release of several key economic data, investors will use this to assess the performance of the US economy and look for clues about the timing of the Federal Reserve’s next interest rate cut.
The preliminary estimate of US Q3 GDP will be released on Tuesday, December 23.
In other regions, investors will look for guidance on the central bank’s policy path through the speech by Bank of Japan Governor Kazuo Ueda on December 25.
On December 29, the Bank of Japan will release the summary of opinions from this week’s interest rate meeting; at this meeting, the Bank of Japan raised its policy rate to 0.75%, the second rate hike by the central bank this year, pushing Japan’s benchmark interest rate to its highest level since September 1995.
Affected by Christmas, US stock markets will close three hours early on December 24 and be closed all day on December 25.
Overview of Important Overseas Economic Events This Week:
Monday: UK Q3 GDP Annual Rate Final Value, Italy November PPI
Tuesday: US Q3 Real GDP Annualized Quarterly Rate Preliminary Estimate, US Q3 Real Personal Consumption Expenditures Quarterly Rate Preliminary Estimate, US November Industrial Production Monthly Rate, US December Conference Board Consumer Confidence Index, US December Richmond Fed Manufacturing Index, Reserve Bank of Australia Releases December Monetary Policy Meeting Minutes
Wednesday: US Oil Rig Count as of December 26, US API Crude Oil Inventories as of December 19, US EIA Crude Oil Inventories as of December 19, Bank of Japan Releases October Monetary Policy Meeting Minutes, Bank of Canada Releases Monetary Policy Meeting Minutes
Thursday: US EIA Natural Gas Inventories as of December 19, Bank of Japan Governor Kazuo Ueda Delivers a Speech at the Japan Business Federation
Friday: Japan November Unemployment Rate
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