Equities' performance diverged last week after investors got the rate cut they wanted from the Federal Open Market Committee. And despite Federal Reserve Chair Jerome Powell's attempt at a hawkish press conference, traders see more rate cuts in the year ahead.
The Russell 2000 index, the small-cap benchmark, hit a record high on Thursday and closed the week up 1.2%. Small-caps are more sensitive to interest rates, and the potential for a dovish new Fed chair could herald a new dawn for small-caps, which have lagged behind their large-cap brethren's performance by more than seven percentage points annually over the past five years.
Meanwhile, the tech-heavy Nasdaq Composite fell 1.6% on the week, as the artificial-intelligence trade wobbled. Earnings results from Oracle and Broadcom weren't well received by the market. Shares of both companies fell more than 10% the day after their respective earnings releases, and they dragged down many AI-adjacent stocks with them.
Normally, Wall Street can take it easy after the December FOMC meeting. It's usually the last big macroeconomic event for the year. But not this year. This week, investors will get an update on both the labor market, which has been weakening, and inflation, which has stubbornly stayed above the Fed's 2% target. This tension is what has left the FOMC deeply divided, with dissents in both directions at the last two monetary policy meetings. The Bureau of Labor Statistics will release the November jobs report on Tuesday and the consumer price index on Thursday, both delayed because of the government shutdown.
On the earnings front, home builder Lennar will report results on Tuesday, General Mills and Micron Technology on Wednesday, and FedEx and Nike on Thursday.
Monday 12/15
The National Association of Home Builders releases its Housing Market Index for December. The consensus call is for a 39 reading, one point more than in November. Readings less than 50 indicate that home builders are pessimistic about the single-family housing market in the next six months.
Tuesday 12/16
Lennar reports fourth-quarter fiscal 2025 results.
The BLS releases the jobs report for November, along with partial October data that was delayed by the record-long government shutdown. Economists forecast a 50,000 increase in nonfarm payrolls, after a 119,000 gain in September. The unemployment rate is expected to remain unchanged at 4.4%. Jobs growth has slowed this year to 76,000 a month on average through September, less than half compared with the same period last year. Even the 76,000 figure may be high, as Fed Chair Jerome Powell said this past week that the April through September jobs data might have been overstated by 60,000 a month.
The Census Bureau reports retail sales statistics for October. Consensus estimate is for a 0.2% month-over-month increase, which would match September's rise. Excluding autos, sales are seen gaining 0.3%.
S&P Global releases both its Manufacturing and Services Purchasing Managers' Indexes for December. Consensus estimates are for a 52.3 reading for the Manufacturing PMI and a 54 for the Services PMI. Those compare with readings of 52.2 and 54.1, respectively, in November.
Wednesday 12/17
General Mills, Jabil, and Micron hold conference calls to discuss quarterly results.
Thursday 12/18
Accenture, Birkenstock Holding, Cintas, Darden Restaurants, FactSet Research Systems, FedEx, Heico, and Nike release earnings.
The Bank of England and the European Central Bank announce their monetary policy decisions.
The BOE is expected to cut its key interest rate by a quarter of a percentage point to 3.75% from 4%. Meanwhile, the ECB is expected to leave its target rate unchanged at 2%.
The BLS releases the consumer price index for November. The consensus call is for a 3.1% increase from a year earlier. The core CPI, which excludes food and energy prices, is expected to rise 3% year over year. Those compare with readings of 3% for both indexes in September. October inflation data couldn't be collected by the BLS due to the government shutdown.
Friday 12/19
Carnival, Conagra Brands, Lamb Weston Holdings, and Paychex announce quarterly results.
The Bank of Japan announces its monetary policy decision. The BOJ is widely expected to hike its benchmark interest rate by a quarter of a percentage point, from 0.5% to 0.75%. That would be the highest level since 1995.
The National Association of Realtors reports existing-home sales for November. Economists forecast a seasonally adjusted annual rate of 4.15 million homes sold, slightly more than in October. The median sales price of an existing home was $415,200 in October, according to the NAR.
