In the last 10 days, the main stock market indicator has not moved much, staying within a small range of 1.4%. On Wednesday, for example, the S&P 500 (^GSPC) closed slightly lower, down 0.38%.
Typically December is a time when the stock market is not very active and tends to rise. But this year, due to the very good returns in November, it could be different.
Three big things will happen next week that could change the behavior of the stock market. It’s about inflation, jobs, and Federal Reserve decisions. These things can make the market more interesting than usual.
On Friday we will know the jobs in November through the Bureau of Labor Statistics (BLS). This report has been a big part of why the stock market is up 18% this year. Last year was different, with an annual loss of 5.46%.
Next Tuesday, the BLS will also tell us about prices and inflation in November. This year, these reports have been good for investors, with an average gain of 0.45% each time. This is a change from last year, when investors lost a total of 0.72% and more than half of the time the reports were bad.
Then on Wednesday, Federal Reserve chief Jerome Powell will discuss his interest rate decisions. Last year, on days when the Federal Reserve was making decisions, stocks gained 4.14%, although they only gained half of the time. But this year, on average, stocks lost a bit these days, totaling a loss of 1.05% for the year.
Because things have been quieter lately, the stock market could make a big move after these reports. While the stock market is mostly up in 2023, other things like the bond market and the US dollar could make things difficult for stocks.
Some people are betting that stocks could go down, especially since they are near important levels. If something big happens, like surprising news, the market could fall more than usual because there aren’t many people trading. But if the reports are good, people betting against the market could end up helping the market rise even higher, perhaps reaching a new record by the end of the year or early 2024.
For short-term traders, it is a good idea to be careful if the S&P 500 drops to 4,500. It could be a trick and the market could rise, surprising those who thought it was going to fall.
Also read: Mixed signals in US stock futures as investors wait for jobs news