Markets Brace for Volatility Amid Economic Data and Trump’s First Moves in January
As U.S. stocks wrap up a stellar year, investors look to sustain the momentum into early 2025. The S&P 500 gained 25% in 2024, and the Nasdaq Composite, which surpassed the 20,000 milestone in December, surged over 31%. However, a late-December selloff has raised concerns about January's market performance.
*Key Factors to Watch in January Seasonal Trends and Market Momentum:*
1. The “Santa Claus rally,” a historical trend where stocks rise during the last five trading days of December and the first two of January, has already contributed to a 1.77% gain for the S&P 500 and a 1.8% rise for the Nasdaq. However, analysts warn that portfolio rebalancing could temper gains in early 2025.
2. Employment Data and Earnings Reports:
The January 10 U.S. employment report will provide insights into economic recovery following strike and hurricane disruptions earlier in 2024. Fourth-quarter earnings season will also test the market’s strength, with 2025 earnings growth expected at 10.33%, down from the projected 12.47% in 2024. Sectors like banking, energy, and crypto are likely to benefit from optimism surrounding incoming President Donald Trump’s pro-business policies.
3. Trump’s Policy Agenda:
Trump’s January 20 inauguration will likely introduce policy shifts, with 25 executive orders anticipated on issues including immigration, energy, and cryptocurrency regulation. His proposed tariffs on China, Mexico, and Canada could increase costs for businesses, potentially affecting consumer prices.
4. Federal Reserve Policy Decisions:
The Fed’s first monetary policy meeting in late January could add uncertainty to markets. Stocks fell earlier this month when the Fed implemented its third rate cut of 2024 but signaled fewer cuts for 2025 due to inflation concerns.
As January unfolds, a mix of economic data, corporate earnings, and Trump’s early actions will shape the market’s direction, testing the resilience of the current rally.
As U.S. stocks wrap up a stellar year, investors look to sustain the momentum into early 2025. The S&P 500 gained 25% in 2024, and the Nasdaq Composite, which surpassed the 20,000 milestone in December, surged over 31%. However, a late-December selloff has raised concerns about January's market performance.
*Key Factors to Watch in January Seasonal Trends and Market Momentum:*
1. The “Santa Claus rally,” a historical trend where stocks rise during the last five trading days of December and the first two of January, has already contributed to a 1.77% gain for the S&P 500 and a 1.8% rise for the Nasdaq. However, analysts warn that portfolio rebalancing could temper gains in early 2025.
2. Employment Data and Earnings Reports:
The January 10 U.S. employment report will provide insights into economic recovery following strike and hurricane disruptions earlier in 2024. Fourth-quarter earnings season will also test the market’s strength, with 2025 earnings growth expected at 10.33%, down from the projected 12.47% in 2024. Sectors like banking, energy, and crypto are likely to benefit from optimism surrounding incoming President Donald Trump’s pro-business policies.
3. Trump’s Policy Agenda:
Trump’s January 20 inauguration will likely introduce policy shifts, with 25 executive orders anticipated on issues including immigration, energy, and cryptocurrency regulation. His proposed tariffs on China, Mexico, and Canada could increase costs for businesses, potentially affecting consumer prices.
4. Federal Reserve Policy Decisions:
The Fed’s first monetary policy meeting in late January could add uncertainty to markets. Stocks fell earlier this month when the Fed implemented its third rate cut of 2024 but signaled fewer cuts for 2025 due to inflation concerns.
As January unfolds, a mix of economic data, corporate earnings, and Trump’s early actions will shape the market’s direction, testing the resilience of the current rally.