Dow Jones, Nasdaq, S&P 500 weekly preview: Focus shifts from NFP to CPI and FOMC
Investors are still digesting the Friday economic data, including a hotter-than-expected jobs report, while also preparing for the busy calendar of macro catalysts, including the release of U.S. inflation data and FOMC decision.
Still, the hot NFP report didn’t stop the S&P 500 (SPX) from printing the fresh 2023 high, ultimately ending the week 0.2% higher. This way, the index recorded the highest weekly close since January 2022.
“This set of data justifies a modest hawkish adjustment in Fed expectations (such as 5/1 instead of 3/20 for the first cut, and ~110bp of cumulative cuts instead of ~140bp), but we don’t think the policy path in 2024 shifted dramatically,” analysts at Vital Knowledge said in a note.
The Nasdaq Composite Index (IXIC) rose 0.7% but didn’t manage to follow the S&P 500 in printing the new high. The Dow Jones Industrial Average (DJI) ended the week flat.
Busy week
On Tuesday morning, the US Consumer Price Index (CPI) will be released, providing insights into inflation trends. The FOMC meeting concluded on Wednesday, December 13. According to a report in the Wall Street Journal, Fed officials are unlikely to seriously consider rate cuts at the upcoming meeting.
However, the central bank is of the view that policy does not need to be maintained at economically restrictive levels indefinitely. The Federal Reserve appears to be assessing the economic landscape and may gradually shift towards a more accommodative stance if warranted.
“We don’t expect a significant tightening of financial conditions or much higher recession risk to become the base case again, which favors small caps and other risk-on factors,” analysts at 22V Research said.
Elsewhere, Thursday will see decisions from central banks
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