The past trading week was relatively quiet for the S&P 500. The index closed Friday evening at 6,870 points, 0.3 % higher than the previous week, but remains clearly bullish at the start of \u201cFed week\u201d and the all-time highs from October are within reach.<\/p>\n\n\n\n
Little movement in the S&P 500 ahead of interest rate decision<\/strong><\/h2>\n\n\n\n
In the last two weeks, the S&P 500 has almost completely made up for the correction in the first week of November and is currently trading just a few points below its highs. The Dow Jones and Nasdaq 100 also made slight gains last week.<\/p>\n\n\n\n
The movement was steady but unspectacular: several days with small gains of 0.1 - 0.3 %, without any major setbacks.<\/p>\n\n\n\n
The yield on 10-year US government bonds remained stable at around 4.1 %, despite strong expectations of a rate cut; an indication that the market is pricing in a moderate, credible easing path rather than an aggressive QE comeback. <\/p>\n\n\n\n
Macro data at a glance<\/strong><\/h2>\n\n\n\n
Several important economic indicators were published last week, signaling a cooling but still stable US economy. Overall, the data points to slowing momentum in industry and the labor market, without already signaling a real recession. For the Fed, this means that the arguments for a rate cut have gained further weight.<\/p>\n\n\n\n
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Industry:<\/strong> At 48.2 points, the ISM Purchasing Managers' Index for the manufacturing sector published on Monday was below the 50 mark for the ninth time in a row, continuing to signal a contraction. New orders (near a 15-year low) and the employment component are particularly weak, raising concerns that the industrial weakness will spill over into the labor market in the medium term. While this is bullish for the S&P 500 in the short term because it makes interest rate cuts more likely, it poses a long-term risk to gains in cyclical sectors. <\/li>\n\n\n\n
Labor market:<\/strong> Mixed labor market data was published over the course of the week: the ADP report showed a decline of 32,000 jobs, mainly at small companies. At the same time, initial jobless claims fell to just 191,000 and announced layoffs, while rising overall in 2025, slowed in November. The labor market thus continues to show a moderate slowdown, but not a slump.<\/li>\n\n\n\n
PCE price index:<\/strong> PCE data for the month of September was published on Friday. The data was in line with expectations. The October data will be published on December 19. Due to the government shutdown, publication was recently suspended and the data will now be delivered on an ongoing basis.<\/li>\n<\/ul>\n\n\n\n
Interest rate cut very likely this week<\/strong><\/h2>\n\n\n\n
The next Fed meeting is now due on Wednesday, and according to the CME FedWatch Tool, the probability of a rate cut of 25 basis points is just under 90 %. The rate cut is therefore largely priced in and is only likely to move the markets if Powell deviates significantly from the expected wording. The outlook will therefore be more decisive than the actual interest rate hike: The market currently expects further cautious cuts in 2026, but not a very aggressive easing cycle.<\/p>\n\n\n\n
In addition, in the coming months, the focus is likely to increasingly turn to the successor to Jerome Powell, whose term of office ends in spring 2026: Who will be nominated as the next Fed chairman and how strongly this person will lean towards a loose monetary policy could significantly shape the medium-term valuation framework for the S&P 500.<\/p>\n\n\n\n
The betting markets see Kevin Hassett as the most likely candidate\ufffc. Hassett is an economist and is considered a Trump confidant. He is known as an advocate of loose monetary policy and a vocal supporter of low interest rates.<\/p>\n\n\n\n
S&P 500 just below all-time high<\/strong><\/h2>\n\n\n\n
The S&P 500 Index has resumed its chart-based upward trend and, following the correction, is now in a new movement phase of the trend. The chances of an upward breakout are therefore very good. Even in the event of a downward movement in the coming days, the long-term chart picture would not change. The technical outlook would only become significantly gloomier if the price fell below the support zone of 6,500 - 6,550 points.<\/p>\n\n\n\nS&P 500 Index daily chart<\/figcaption><\/figure>\n\n\n\n
Another positive aspect is that the equally weighted S&P 500 has risen sharply in recent days and is also trading just a few points below its all-time high. A breakout of the S&P 500 Equal Weighted Index would be an important signal for the S&P 500, as it would signal a participation of the broad market, which would significantly increase the probability of a continuation of the bull market in the medium term.<\/p>\n\n\n\nS&P 500 Equal Weighted Index daily chart<\/figcaption><\/figure>\n\n\n\n
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