What’s in store? Your guide to Dec. 16-20, 2024.

The upcoming Federal Reserve policy meeting, scheduled for next week, is poised to be a pivotal event that will impact markets as we head towards the end of 2024 and look ahead to 2025. The meeting, which takes place on December 17-18, will provide crucial insights into the central bank’s decisions regarding interest rates and the economy. According to Wall Street projections, there is a 97% likelihood that the Fed will lower its benchmark lending rate by a quarter-percentage point, aiming for a target range between 4.25% and 4.50%.
In addition to the rate cut, the meeting will also unveil the Fed’s quarterly summary of economic projections, known as the “dot plot,” which outlines policymakers’ expectations for inflation, the job market, and future interest rate adjustments. Market expectations are leaning towards a dovish outlook, with projections indicating the possibility of three or four more rate cuts in the coming year. This optimistic stance on rate cuts could potentially fuel a year-end stock market rally.
Industry experts like Joe Tigay, portfolio manager at the Rational Equity Armor Fund, anticipate that lower interest rates could lead to a decrease in the dollar value and an increase in tech stocks. However, concerns about inflation persist, especially as the Fed’s preferred inflation gauge is set to be released after the meeting. Economists predict a slight rise in annual inflation rates, which could present challenges to an already expensive market.
As investors await the Fed’s decision, they are also preparing for a busy week of corporate earnings reports, with major companies like Micron Technology, Nike, FedEx, and Darden Restaurants scheduled to announce financial results. Additionally, key economic indicators such as retail sales, industrial production, and housing market data will be released throughout the week, providing further insights into the health of the economy.
Overall, the outcome of the Federal Reserve policy meeting and the accompanying economic data releases will have a significant impact on market sentiment and investor behavior. With inflation and interest rates playing a crucial role in shaping the market landscape, investors are advised to stay vigilant and maintain a diversified portfolio to navigate potential market volatility in the coming year.