The market continues to navigate the final trading weeks of 2024, with investors closely watching economic indicators and the Fed's potential signals about monetary policy. The S&P 500 ($SPX) (SPY) has been riding a wave of optimism following recent economic data and expectations of potential rate cuts in 2025.
This week brings several critical economic releases that could significantly influence market direction and set the tone for year-end trading.
Here are 5 things to watch this week in the Market.
Manufacturing and Services PMI
Monday morning at 9:45 am brings the S&P Global Manufacturing and Services Purchasing Managers' Index (PMI) for December. These flash PMI readings will provide an early glimpse into the health of the U.S. manufacturing and services sectors. After months of manufacturing contraction, investors will be looking for signs of potential stabilization or expansion. A reading above 50 could signal economic resilience, while continued contraction might raise concerns about economic slowdown and reinforce expectations of Fed rate cuts.
Retail Sales
Tuesday at 8:30 am, the Retail Sales report for November will offer insight into consumer spending during the critical holiday shopping season. With consumer sentiment having been mixed recently, this report could provide a clearer picture of economic health. A strong report could indicate continued consumer resilience and potentially support market optimism, while a weak print might raise concerns about economic slowdown and consumer spending patterns.
FOMC Statement and Interest Rate Decision
Wednesday at 2 pm, the Federal Reserve will release its final monetary policy statement and interest rate decision for 2024. While most expect rates to remain unchanged, the accompanying dot plot and Chair Powell's press conference will be crucial. Investors will be parsing every word for hints about the timing and potential magnitude of rate cuts in 2025. Any signals about the Fed's economic outlook could cause significant market volatility.
Q3 GDP Revision
Thursday at 8:30 am, the final revision of Q3 2024 GDP will be released. This will provide a comprehensive look at economic growth for the third quarter. Any significant revisions could impact market expectations about economic performance and potential Fed actions. A stronger-than-expected GDP print might suggest economic resilience, while a downward revision could fuel expectations of potential monetary easing.
Year-End Options Expiration
Friday marks the December options expiration, traditionally one of the most volatile trading days of the year. As traders and investors roll or close out their option positions, we could see increased trading volume and potential price swings across various sectors. The concentration of options activity in major indices and large-cap stocks could lead to interesting market dynamics, especially given the current year-end positioning and market sentiment.
Best of luck this week and don't forget to check out my daily options article.
