Stocks Closed Lower On Friday, But Up For The Week Stocks closed lower on Friday, but higher for the week. It was another low volume day on Friday (actually, the lowest volume day of the week last week). I suspect we'll see another lower volume week this week with the markets being closed on Wednesday for New Year's Day. But it should pick up by week's end. And we should be back to normal next week as everybody kicks off the first full trading week of the year. In spite of the holiday season, the previous few weeks were jam packed with plenty of market moving news in the way of several inflation reports, and the FOMC Announcement. Inflation progress has recently slowed. Obviously, we've seen lots of progress on inflation so far. Enough for the Fed to have already cut interest rates by 100 basis points. But the slower progress (if not stalled progress) has caused the Fed to reduce their outlook for rate cuts next year from 4 cuts (presumably by 25 basis points each) to 2 cuts. That's still positive for the market. But it did come as a bit of a surprise. With the Fed having a dual mandate of price stability (low inflation) and maximum employment, the jobs report is an important piece of data in helping to shape the Fed's monetary policy. While we won't get that this week, it'll come soon enough next week on Friday, January 10. That will be the first major economic report of 2025. A report showing sharply higher job growth would likely suggest the Fed has time to pause their rate cuts, while a meaningful miss would suggest the economy may not be as strong as some think, including the Fed. That would suggest a seamless continuation of rate cuts, no pause necessary. At the moment, Fed Funds traders, via the CME's FedWatch tool, have an 89.3% probability that the Fed will NOT cut rates in January. But the Fed insists it will remain data dependent. So every report counts, hence the interest in the next jobs report. In other news last Friday, the International Trade in Goods report showed the trade balance increase to -$102.9 billion vs. last month's -$98.3B and views for -$101.0B. Imports were up 4.5% vs. last month's -5.5%, while exports were up 4.4% vs. last month's -3.1%. Retail Inventories rose 0.3% m/m vs. last month's 0.2%. Although, Wholesale Inventories slipped -0.2% m/m vs. last month's 0.1% and estimates for the same. Today we'll get the Chicago PMI, Pending Home Sales, and the Dallas Fed Manufacturing Index. The countdown begins to the end of the year and the start of the new one. With just 2 trading days left until 2024 is over, the Dow is up 14.1%; the S&P 500 is up 25.2%; the Nasdaq is up 31.4%; the small-cap Russell 2000 is up 10.8%; and the mid-cap S&P 400 is up 12.8%. It's been a spectacular year so far. And next year could be even better. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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