Wall Street week ahead: After Fed’s hawkish stance, investors to look for Santa Claus rally

After the hawkish stance of the US Federal Reserve last week, investors on Wall Street in the holiday-shortened week ahead will face a largely uneventful economic calendar.

On Wednesday, markets will remain shut due to Christmas holiday, while Tuesday will see a truncated trading session.

As the year 2024 is nearing its end, investors will be hoping for Santa Claus rally. This phenomenon occurs when stocks rise on the last five trading sessions of December and the first two trading sessions of January.

The US Federal Reserve reduced its interest rates by 25 basis points, but its forward guidance for 2025 softened.

The threat of higher inflation was one of the reasons Fed Chair Jerome Powell gave last week when the central bank hinted it may deliver fewer rate cuts in 2025 than it earlier expected.

Economic calendar

On December 23 (Monday), a report on consumer confidence for December will be released.

On December 24 (Tuesday), separate reports on durable goods orders for November and new home sales November will be released.

On December 26 (Thursday), data on initial jobless claims for week ended December 21 will be released.

On December 27 (Friday), separate reports on advanced US trade balance in goods for November and advanced retail inventories for November will be released.

Markets last week

US stock indices surged on Friday on better than expected inflation data.

The Dow Jones Industrial Average rose 498.82 points, or 1.18 per cent, to 42,841.06, the S&P 500 gained 63.82 points, or 1.09 per cent, to 5,930.90 and the Nasdaq Composite gained 199.83 points, or 1.03 per cent, to 19,572.60.

For the week, the S&P 500 fell 1.99 per cent, the Nasdaq declined 1.78 per cent, and the Dow dropped 2.25 per cent.

In the bond market, the yield on the 10-year Treasury fell to 4.52 per cent from 4.57 per cent.

Crude oil posted a weekly loss as investors weighed the Fed’s slower approach to cutting rates and President-elect Donald Trump’s threat to impose tariffs on EU countries unless they buy more US oil and gas.

Brent futures settled little changed near $73 a barrel to cement a 2.1 per cent drop for the week. West Texas Intermediate held steady above $69 a barrel, with the February contract down 1.9 per cent.