Weekly Market Recap: Tech Gains, Global Trends, and Fed Decisions on the Horizon

Market Overview

U.S. markets showed mixed performance last week as major indexes continued their December momentum following a strong November close. The S&P 500 rose by 1%, buoyed by technology and consumer discretionary stocks fueled by artificial intelligence (AI) optimism, while the Nasdaq Composite outperformed with a 3.3% weekly gain. However, the Dow Jones Industrial Average fell by 0.61%, weighed down by declines in healthcare and financials. Small-cap stocks also struggled, with the Russell 2000 declining by 1.35%.

Internationally, European and Asian equities logged solid gains, shaking off political disruptions. European stocks found support in dovish remarks from the European Central Bank (ECB), while Asian markets rallied, led by Taiwan and Japan. U.S. Treasuries remained mostly flat, while oil prices dipped 1.26% on OPEC+ production headlines. The U.S. dollar strengthened modestly on better-than-expected consumer sentiment, while gold and silver posted mixed results.

Federal Reserve Insights and Economic Roundup

The Federal Reserve's December 18 meeting remains in focus, as November’s labor market data has added complexity to rate-cut expectations. Nonfarm payrolls rose by 227,000, a sharp rebound from October’s hurricane-impacted report. The unemployment rate ticked up to 4.2%, reflecting a gradual loosening of labor markets, while average hourly earnings climbed 4% year-over-year.

Fed Chair Jerome Powell's remarks that the "economy is in very good shape" suggest a measured approach to rate adjustments. Labor market normalization, evidenced by declining job openings and stable quit rates, supports the notion of the Fed maintaining its current policy path in the short term. However, market participants remain divided over the possibility of a rate cut this month.

Real wages have continued to grow, empowering consumers despite inflationary pressures. This resilience in consumer spending is expected to sustain broader economic momentum into year-end.

 The Week Ahead

Monday: Final October data on wholesale inventories, trade sales, and New York Fed inflation expectations.

Tuesday: NFIB Small Business Optimism Index and final Q3 readings on productivity and labor costs.

Wednesday: November CPI, Federal Budget Balance, and real wage data.

Thursday: PPI, weekly jobless claims, and Q3 household net worth data.

Friday: Import and Export Price Index updates on inflation and trade.