A series of delayed data on employment, inflation and other indicators next week will provide a long-awaited look at the U.S. economy that could help guide markets through the end of the year.
US stocks retreated later in the week following the benchmark index (11), while the Nasdaq underperformed. Disappointing quarterly reports from Oracle and Broadcom, two emblematic stocks in the artificial intelligence sector that have driven markets throughout this year, have put pressure on the technology sector, which has great weight in the market.
The soon-to-be-released data is essential because investors and the Federal Reserve have been navigating with little precision since the 43-day federal government shutdown delayed important reports.
The US jobs report for November will be released on Tuesday (16), while the monthly consumer price index, which is closely monitored by inflation trends, will be released on Thursday (18).
“There was a lack of clarity for investors,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors. “Strong corporate earnings certainly helped support markets. The Fed and anticipated rate cuts provided a small boost. But now it’s time to turn our attention to the underlying economy and where we’re headed.”
The Fomc (Federal Open Market Committee), in a vote of 9 to 3, (10), leading to the range of 3.5% to 3.75%, seeking to strengthen a declining job market. But the US central bank has signaled that borrowing costs are unlikely to fall further in the near term as it awaits greater economic clarity.
“Due to the government shutdown and recovery timeline, we essentially have three months of employment and inflation data between the December and January Fed meetings,” said David Seif, chief developed markets economist at Nomura.
The number of jobs created in the US is expected to have increased by 35,000 in November, according to a Reuters poll. Fed Chairman Jerome Powell said Wednesday that while the average number of jobs created has grown by 40,000 per month since April, the Fed believes these numbers are overestimated and that in reality the average drop could be 20,000 per month.
“If we start to see negative employment data, we won’t be able to avoid the recession discussion,” said Marvin Loh, senior global macro strategist at State Street.
The monthly Consumer Price Index (CPI) data comes at a time when inflation remains above the Fed’s target, which could complicate any further easing of monetary policy if inflation does not slow down. Three members of the monetary policy committee disagreed with the decision to cut interest rates, including two who argued that rates should have remained unchanged.
“We continue to expect further cuts in January and April, but if the labor market stabilizes, future cuts may not occur until inflation slows,” Morgan Stanley economists said in a note released on Thursday (11).
A report on retail sales is among other data released next week that will help provide more information on economic growth. Micron Technology’s quarterly report on Wednesday may also attract greater attention following the turmoil in the artificial intelligence sector this week.
The S&P 500 index is up 16% so far in 2025, bringing gains during the bull market that began in October 2022 to 90%. December is traditionally a positive month for stocks.
However, investors may attempt to take year-to-date profits, which may generate selling pressure. The proximity of holidays also tends to reduce trading volume, which can lead to exaggerated movements in asset prices.
“Overall, it was a very, very good year for risk assets,” Loh pointed out. “If unstable numbers emerge or there is no compelling reason to increase risk exposure, this could increase market volatility due to lower liquidity.”
