After „Thanksgiving“ and the associated stock market holiday or an extended weekend, many investors are likely to return and revive trading activity.
The focus will once again be on important economic data, which will need to be analyzed for monetary policy clues. Around a week and a half before the Fed's final meeting of 2025, tension is likely to rise.
Concerns about the bursting of a possible „AI bubble“ are likely to act as a sword of Damocles
In addition to hopes of a US interest rate cut, however, the fear of a potential „AI bubble“ bursting is likely to continue to act as a classic sword of Damocles. Should the technology sector come under fire in this context, Wall Street may well be taken to the cleaners. Confidence in a year-end rally therefore seems to be crumbling at the start of the week.
Numerous US economic data expected - ADP employment data in focus on Wednesday
Today, Monday, investors are already looking ahead to the ISM Purchasing Managers' Index for the manufacturing sector (16:00).
In the middle of the week, the ADP employment data (14:15) will be the first to watch. This data could provide important clues about the current situation on the US labor market. The Bureau of Labor Statistics will not publish an October employment report for the time being due to the recent partial government shutdown. The publication of the US labor market data for October and November has therefore been postponed to 16 December. This means that the Fed is likely to be missing an important piece of data on December 9 and 10. The so-called "non-farm payrolls" are usually published on the first Friday of the new month.
„CME Group's “Fed Watch Tool" continues to signal a high chance of a rate cut in December
However, market participants still believe there is a good chance of a rate cut. According to the CME Group's „Fed Watch Tool“, the probability of a rate cut of 25 basis points is currently estimated at 87.6%. There is a 12.4 percent chance of a pause in interest rates. The interest rate band itself currently stands at 3.75 to 4.00 percent.
ISM Purchasing Managers' Index and US price data round off the trading week
The counterpart to the Purchasing Managers' Index (ISM) for the services sector is on the agenda at 16:00.
On Friday, particular attention should be paid to the core rate for personal consumption expenditure (14:30). Consumer confidence from the University of Michigan should also be kept an eye on (16:00).
Both sets of data are likely to be eagerly awaited and could send important signals, not least ahead of the weekend, before the Fed's interest rate decision on Wednesday. The comments expected from Fed Chairman Jerome Powell in this context are also likely to be of great importance and will help decide the fate of the markets.
Dow Jones Industrial Average Index
