US equity investors will look out for the so-called "Santa Claus Rally," fueled by macroeconomic data and continued positivity in the artificial intelligence trade during this holiday-shortened week.
* The equity markets will close early on Wednesday at 1 pm ET and will remain closed Thursday for the Christmas holiday. Volumes are likely to remain thin this week.
* "Stocks are more likely to go up than down over this [holiday week] period despite lower volumes, fewer trading catalysts and with more market participants away from work," Derek Holt, head of capital market economics at Scotiabank, said in a note late Friday.
* Last week, US equity indexes ended mixed as a cooler inflation print and Micron Technology's (MU) solid fiscal Q1 results helped partially offset souring sentiment against the so-called AI trade.
* Durable goods orders for October, an estimate for Q3 gross domestic product, industrial production, the Conference Board's consumer confidence, jobless claims, and ADP weekly employment change are among the data releases due this week.
* Incoming economic data are likely to impact market pricing of monetary policy easing next year. Currently, the market is pricing in a roughly 46% probability of a 25-basis-point interest-rate reduction in March, versus a 42% likelihood a week ago, according to the CME FedWatch tool. The probability of rates being left unchanged in March is also 46%.
* Federal Reserve Bank of Cleveland President Beth Hammack reportedly said monetary policy is in a good place to pause and evaluate the effects of 75 basis points of rate cuts on the economy during Q1.
* "Where we are today is my base case that we can stay here for some period of time until we get clearer evidence that either inflation is coming back down to target or the employment side is weakening more materially," Hammack was cited as saying.
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