The first full week of 2025 arrives with markets looking to establish direction after December's strong gains. The S&P 500 ($SPX) (SPY) starts the year near all-time highs as investors focus on upcoming economic data and potential Fed signals.
This holiday-shortened week brings several critical economic releases along with the first FOMC minutes of the year, all of which could set the tone for early 2025 trading.
Here are 5 things to watch this week in the Market.
Services Sector Data
Monday and Tuesday bring key readings on the services sector with the S&P Global Services PMI at 9:45 am Monday, followed by the ISM Non-Manufacturing PMI Tuesday at 10 am. With services making up the largest portion of the U.S. economy, these reports could provide crucial insight into economic momentum. After mixed signals in recent months, any significant deviation from expectations could impact market sentiment and sector rotation.
JOLTS Job Openings
Tuesday at 10 am brings the Job Openings and Labor Turnover Survey (JOLTS) for November. The labor market's strength has been a key factor in Fed policy decisions, and this report could influence expectations for rate cuts in 2025. A significant drop in job openings might fuel speculation about earlier rate cuts, while stronger numbers could temper such expectations.
ADP Employment Report
Wednesday at 8:15 am, the ADP Employment Change report will provide an early look at private sector job growth. As the first major employment report of 2025, this could set expectations for Friday's government jobs report (which will come next week due to Thursday's market closure). Any substantial deviation from expectations could impact market sentiment and rate expectations.
FOMC Meeting Minutes
Wednesday at 2 pm, the Federal Reserve releases minutes from its December meeting. With markets pricing in multiple rate cuts for 2025, investors will closely parse these minutes for insights into the Fed's thinking about potential policy shifts. Any hints about the timing or pace of rate cuts could create significant market volatility.
Market Holiday
Markets will be closed on Thursday in observance of the National Day of Mourning for former President Jimmy Carter. This closure, coming in the first full week of the year, could impact trading patterns and volumes. Traders should be prepared for potential increased volatility around Wednesday's close and Friday's open as positions are adjusted for the weekend.
Also worth noting is Wednesday's 10-Year Note auction at 1 pm, which could provide insight into bond market dynamics ahead of the FOMC minutes.
Best of luck this week and don't forget to check out my daily options article.
