Despite Friday’s rally, stocks finished the week with heavy losses. The S&P 500 (SPX) declined by 1.99% and the Dow Jones Industrial Average (DJIA) tumbled by 2.25%. Meanwhile, the tech benchmarks Nasdaq Composite (NDAQ) and Nasdaq-100 (NDX) dropped by 1.78% and 2.25%, respectively.
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Most of the weekly losses were due to the market’s dramatic reaction to the news from the Federal Reserve’s meeting on Wednesday. The central bank’s decision to reduce rates by 0.25% was widely expected and priced in. However, the Fed’s “Dot Plot” revealed that policymakers expect only two interest-rate cuts next year – versus the four they had penciled in at their September’s meeting. Moreover, Jerome Powell said that the rate committee members now anticipate higher core inflation in 2025 than was previously forecast, and that the central bank is “going to be cautious about further cuts.”
However, a strong upwards update to the Q3 2024 GDP growth assessment, and even more importantly, a weaker-than-forecast Core PCE inflation increase last month, injected a healthy dose of optimism into markets going into the weekend. After the Fed reset market expectations regarding the speed and depth of the monetary easing next year, it has more room to surprise markets with additional cuts supporting the rally if inflation continues to decelerate.
Three Economic Events
Here are three economic events that could affect your portfolio this week. For a full listing of additional economic events, check out the TipRanks Economic Calendar.
» December’s Consumer Confidence Index – Monday, 12/23 – This report, released by the Conference Board, conveys the level of confidence that consumers have in economic activity. The level of confidence affects consumer spending, which contributes about 70% of the U.S. GDP, and therefore this Index is one of the most important leading indicators.
» November’s Durable Goods Orders – Tuesday, 12/24 – This report measures the cost of orders received by manufacturers for durable goods, such as vehicles and electrical appliances. As those durable products often involve large investments, they are sensitive to the economic situation. The report helps assess the state of U.S. production activity and reflects the demand for big-ticket goods, which is dependent on the forecasted state of consumer sentiment and the economy in general.
» November’s New Home Sales Change – Tuesday, 12/24 – This report is an important economic indicator, reflecting housing market health, consumer confidence, and economic activity. Trends in sales can influence construction, employment, and related industries, making it critical for assessing economic growth and forecasting housing market trends.
For more exclusive market insights and content from TipRanks Macro & Markets research analyst Yulia Vaiman, click here.
