The year's final trading week transitions into 2025 with one holiday closure but otherwise normal trading hours. The S&P 500 ($SPX) (SPY) has seen impressive gains in 2024, and investors will be watching to see if the momentum carries into the new year.
This week brings an irregular trading schedule along with several key economic releases that could influence early 2025 market direction.
Here are 5 things to watch this week in the Market.
Holiday Trading Schedule
Markets will be closed on Wednesday for New Year's Day and will likely see lower trading volumes on other days. These irregular sessions can lead to increased volatility and wider spreads. Traders should exercise caution during these thin trading conditions as price movements can be more pronounced and potentially erratic.
Initial Jobless Claims
Thursday at 8:30 am brings the Initial Jobless Claims report, one of the first significant economic indicators of 2025. The labor market's strength has been a key factor in the Fed's policy decisions throughout 2024. Any significant deviation from recent trends could impact market sentiment and expectations for potential rate cuts (or not) in the coming months.
Manufacturing PMI
Thursday at 9:45 am, the S&P Global Manufacturing PMI report will provide insight into factory activity. This early read on manufacturing sector health could set the tone for industrial stocks in the new year. After struggling with contraction through much of 2024, any signs of expansion could boost cyclical stocks, while continued weakness might fuel concerns about economic growth.
Crude Oil Inventories
Thursday at 11 am brings the weekly EIA Crude Oil Inventories report. With geopolitical tensions and OPEC+ production decisions continuing to influence oil prices, this report could impact energy sector stocks and broader market sentiment. Any significant surprise in inventory levels could create volatility in both energy markets and related equities.
Santa Claus Rally and January Effect
The traditional Santa Claus Rally period, encompassing the last five trading days of December and first two of January, will conclude this week. Historically, this period has often seen positive returns. Additionally, the January Effect typically benefits smaller-cap stocks as tax-loss harvesting selling pressure subsides. These seasonal patterns, combined with new year portfolio rebalancing, could create interesting trading opportunities across various market segments.
Best of luck this week and don't forget to check out my daily options article.
