This week, the overall US stock market has emerged from a trend of rising and falling, with the weekly gains of the three major indices narrowing to within 1%. Analysts and traders said that some profit taking trades and doubts about market performance in January next year led to a sell-off in the stock market on Friday.
Robert Pavlik, Senior Portfolio Manager at Dakota Wealth, said, "Some people are concerned that there may be some repositioning and reallocation of funds in the first half of next year, and investors who trade on Friday and next week may want to take the initiative
Looking ahead to next week, there are still two trading days left in the US stock market in 2024. As of Friday's close, the Dow Jones Industrial Average has risen 14% this year, the S&P 500 Index has risen 25%, and the Nasdaq Composite Index has risen 31%, all of which are expected to see a significant increase for the second consecutive year.
At present, the US stock market is in a period known as the 'Santa Claus market', which refers to the last five trading days of the year, plus the first two trading days of the previous year. Data shows that since 1950, the S&P 500 index has returned 1.3% in these seven days.
But whether and how long the upward momentum can last will depend on various forces that may drive the market in 2025. Next week, S&P Global and ISM will release their manufacturing PMI reports, which may give investors a new understanding of the health and strength of the US economy.
In addition, every move of President elect Trump of the United States affects the financial market, and the market is still speculating about what policies he will take the lead in introducing after his inauguration on January 20, involving a series of issues, including immigration, energy, cryptocurrency, the situation in the Middle East, the Russia-Ukraine conflict and so on.
Michael Rosen, Chief Investment Officer of Angeles Investments, said, "People hope that next year's taxes and regulations in the United States can be lowered or reduced, which will help support corporate profits, which are the fundamental factors driving the stock market
Helen Given, Deputy Director of Trading at Monex USA, stated that the arrival of a new government always brings great uncertainty. Given added that the potential impact of the Trump administration's trade policies is likely to be far from fully reflected in the global currency market.
In addition, the Federal Reserve's first monetary policy meeting of 2025 scheduled for the end of January may also pose a challenge to the rise of the US stock market. Early next Saturday morning Beijing time (next Friday Eastern time), Richmond Fed Chairman Barkin will deliver a speech.
In terms of the energy market, as the dust settles from the OPEC+meeting, continued production cuts will make it difficult to open the supply-demand gap in the short term. However, both the Federal Reserve and the European Central Bank have recently released hawkish messages, indicating that the short-term strength of the US dollar has exerted some pressure on oil prices.
Overview of Important Overseas Economic Events Next Week (Beijing Time):
Monday (December 30th): December Chicago PMI, November Existing Home Contract Sales Index Monthly Rate, December Dallas Federal Reserve Business Activity Index
Tuesday (December 31st): FHFA House Price Index Monthly Rate for October in the United States
Wednesday (January 1st): European and American stock markets closed on New Year's Day
Thursday (January 2): Eurozone December manufacturing PMI final value, UK December manufacturing PMI final value, US initial jobless claims for the week ending December 28, US December S&P global manufacturing PMI final value, US November construction expenditure monthly rate
Friday (January 3rd): EIA crude oil inventory and December ISM manufacturing PMI for the week ending December 27th in the United States
Saturday (January 4th): Richmond Fed Chairman Barkin delivers speech