Stocks correct lower after more hawkish Fed outlook into 2025

Macroeconomic/ geopolitical developments

• Global equity markets faced a turbulent week with significant declines, led by U.S. stocks, as concerns over interest rates and trade weighed on sentiment, though a Friday rally and strong year-to-date gains for major indices offered some relief.

• The Federal Reserve signaled a cautious approach to rate cuts in 2025, reducing its forecast to two cuts from four, citing elevated inflation and economic resilience, which unsettled markets despite aligning with broader expectations.
• November’s PCE inflation data showed smaller-than-expected increases, with headline inflation at 2.4% and core inflation at 2.8% year-over-year, offering some market relief, despite ongoing economic uncertainties.

• Markets will follow adjusted schedules for Christmas and New Year’s, as we reflect on a year of robust equity gains and look forward to continued success in the new year.

Global financial market developments

• Global equity averages sold off, led by the US markets after the Fed
• US and European bond lower prices/ higher yields on the week
• The US Dollar Index rallied to a new multi-month high.
• Gold futures sold off, before rebounding
• Oil futures stayed in both narrower, and broader consolidation ranges

Key this week

Central Bank Watch: The main central bank activities this week are the Bank of Japan and Reverse Bank of Australia Monetary Policy Meeting Minutes on Tuesday.

Macro Data Watch: The main macro data releases this week are the US US Consumer Confidence, plus the UK and Canadian GDP all on Monday and Japanese CPI on Friday.

Steve Miley (The Market Chartist)

Editor in chief

Steve Miley is the Market Chartist and has 32 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Mar... Continued