The stock market will now need to weather an important week of economic data as it enters a major rotation that could drive the market toward a year-end rally. The coming week is filled with important reports, including jobs and inflation data that have been delayed due to the government shutdown. November nonfarm payrolls, originally scheduled to be released at the beginning of the month, will instead be released on Tuesday, Dec. 16, followed by October retail sales, and the November consumer price index will be released on Thursday, Dec. 18. Wall Street is hoping the statistics will confirm what investors have already suspected in recent months. In other words, slowing job growth in a “no jobs, no layoffs” environment and persistent inflation that still falls short of the Federal Reserve’s 2% goal, both of which indicate economic weakness. economy. Still, if the coverage is as expected, or even better if there’s a positive surprise, it could open the door for buyers ahead of the holiday season. “If we get consistent data, this market will continue to rise through the end of the year,” said Jay Woods, chief market strategist at Freedom Capital Markets. “A positive surprise in either (non-farm payrolls or CPI) could add momentum to the rally and could see an S&P 7,000 rally on the floor and some brokerages on the stock exchange.” Weak employment, rising inflation Of course, any surprises in next week’s announcement should be taken with a grain of salt, given that delays in data collection could mean incomplete numbers or other distortions. (For example, October payroll data will be included in the November release, but the unemployment rate for that month will not be released.) Nonfarm payrolls in the U.S. are expected to increase by 40,000 jobs in November over the past month, according to FactSet consensus estimates. This is far less than the 119,000 jobs added in September’s jobs report, the first major jobs report since the government reopened. But an alternative data set that investors focused on during the data blackout suggests the job market may be worse than feared. Federal Reserve Director Jerome Powell said Wednesday that “systematic overcounting” likely caused negative job growth in recent months, suggesting the data would include a major downward revision. At the same time, the November consumer price index is expected to show that headline inflation rose to 3.1% last month from a year earlier, according to FactSet consensus estimates. Core inflation, which excludes food and energy, is also expected to be 3.1%. Both reports, one showing slowing job growth and the other showing sticky but stable inflation, could support accommodative monetary policy. Fed policymakers plan to cut rates by just a quarter of a point in 2026, but the market is pricing in two cuts, according to the CME FedWatch tool. Conversely, a big surprise in employment or inflation could hurt stocks that are already vulnerable because of their sky-high valuations. Mark Zandi, chief economist at Moody’s Analytics, said stocks are “at risk of correction if things don’t continue very close to scenario.” Rotation Underway December is typically a seasonally strong month for stocks. It was the second best-performing month of the year for the S&P 500 index, which has averaged a 1.3% rise in data dating back to 1929, according to a UBS note. Additionally, these gains are typically concentrated in the second half of the month. The S&P 500 is just shy of its 7,000 milestone. It closed above $6,900 for the first time on Thursday. The Dow Jones Industrial Average hit a new all-time high. But next week could determine which stocks will lead the year-end rally. Tech stocks lagged significantly this week after disappointing quarterly results from Oracle and Broadcom, signaling a shift away from anything related to artificial intelligence. In response to this, many investors began to seek a “recovery of value.” Only the Dow Jones Industrial Average, which is closely tied to old economy companies, outperformed this week, rising 1%. The other two major averages fell for the week, with the Nasdaq down 1.6%. Financials outperformed. Small-cap stocks hit new highs. However, if next week’s economic report leaves investors worried about the economic outlook, there is a possibility that the rotation into sectors that have lagged behind may be reversed. “Technology is definitely driving money out of the market, and people are moving into sectors that don’t provide a huge tailwind to the market,” said Freedom Capital Markets’ Mr. Woods. “But until technology can regain its footing and take us to a higher level, the market will continue to exist.” Week Ahead Calendar All Hours (ET). Monday, Dec. 15 Tuesday, Dec. 16 8:30 a.m. Nonfarm Payrolls (November) 8:30 a.m. Retail Sales (October) Earnings: Lennar Wednesday, Dec. 17 Earnings: Micron Technology, General Mills Thursday, Dec. 18 8:30 a.m. Consumer Price Index (November) 8:30 a.m. Real Earnings (November) Unemployment claims (week ending Dec. 13) Revenues: Nike, FedEx, Cintas, Darden Restaurants Revenues for Friday, Dec. 19: Lamb Weston, Paychex, Conagra brands
