“This pace is on the verge of acceptable levels of inflation and underlines the importance of this week’s release,” said Glenmede’s Jason Pride and Michael Reynolds. “The Fed is likely leaning towards a 25 basis point rate cut next week, but only if it is reasonably confident that inflation problems will not resurface.”

For Neil Dutta of Renaissance Macro Research, those who see an inflation boom deterring the Fed from cutting interest rates cannot use the labor market to make their case.

“A prolonged slowdown in the labor market is keeping monetary policy easing in check,” he noted.

“While the start of Fed easing, the removal of election uncertainty and ‘animalistic sentiments’ have sustained the bull market, investors have recently been inundated with arguments related to market technical factors,” said Lisa Shalett of Morgan Stanley Wealth Management. “In general, it’s good advice to never fight ‘the Fed’ or ‘the tape’.”

She expects positive technical factors and seasonality could boost US stocks by another 5-10%.

“While bears argue that the year-end rally reflects stagnant trading volume or ‘window dressing’ by market participants, bulls emphasize favorable seasonal tailwinds, calm risk factors and a supportive fundamental backdrop,” said Nationwide’s Mark Hackett. “This optimism, coupled with robust labor market data for November, has helped major stock indexes reach new record highs despite ongoing concerns about Fed policy, labor market risks and geopolitical unrest.”

The S&P 500 will extend its record-breaking rally to 7,100 by the end of next year amid a strong economy, according to Oppenheimer Asset Management, whose outlook is currently the most optimistic among its peers.

The fundamentals “point to the economy’s current resilience, and the stock market appears poised to continue into next year,” John Stoltzfus, the firm’s chief investment strategist, wrote in a note.

Citigroup Inc. strategists expect mid-single-digit gains for the S&P 500 in 2025 amid rising volatility fueled by a soft landing for the U.S. economy, artificial intelligence and Donald Trump’s policy promises.

Your base case is 6,500 points for the S&P 500. The upper scenario is 6,900 and the lower case is 5,100; Both the bull and bear scenarios “build expectations of increased volatility,” the strategists wrote.

Post-election euphoria and seasonal tailwinds set U.S. stocks up for a strong fall, and so far the positive fall performance is a sign that gains can continue into the new year if history is any guide.

Since 1930, after above-average returns in November and December, the S&P 500 averaged a 3% gain in the following first quarter and rose more than two-thirds of the time, according to strategists Gina Martin Adams and Bloomberg Intelligence Michael Casper. That means the U.S. stock benchmark’s nearly 6% rise over the last month helps ensure the index will continue to rise in January as long as stocks continue to rise over the next few weeks.

Hedge funds made net purchases of U.S. stocks for the first time in four weeks, with macroeconomic products such as indexes and exchange-traded funds accounting for nearly 90% of net purchases, according to a report from Goldman Sachs Group Inc.’s prime brokerage desk for the week ending Dec. 6.

There was modest net buying of individual stocks, with long purchases slightly outpacing short sales. Hedge funds net bought information technology stocks at the fastest pace in seven weeks, although the sector was still net sold last month. The industrial sector was the sector with the most net selling, with notional short sales last week the largest in more than two years.

U.S. stock futures positioning on the buy side has fallen slightly after hitting a new all-time high, while some investors expect a “significant decline” on the horizon, according to RBC Capital Markets strategists led by Lori Calvasina.

According to Deutsche Bank AG strategists led by Parag Thatte, investors’ commitment to stocks remains above average, but does not reach extreme levels.

They noted that discretionary investor engagement has declined following the post-election surge, but is still elevated. Positioning in mega-cap growth and technology stocks has increased, while the gap between cyclicals and defensives has closed. Small cap exposure is near the top of its historical range.

Company highlights:

• Another activist investor – Barington Capital Group – is calling on Macy’s Inc. to take drastic steps to boost its stock price.

• Mike Sievert, chief executive of T-Mobile US Inc., warned investors to be “cautious” about the telecom company’s fourth-quarter results, which will be “downstream.”

• A Morgan Stanley analyst admits he missed Reddit Inc.’s huge post-IPO gains. However, he feels there is still time to get involved.

• Mondelez International Inc., the snack and confectionery company, is exploring the acquisition of iconic U.S. chocolate maker Hershey Co., in a potential deal that would create a food giant with total sales of nearly $50 billion, sources said familiar people.

• MicroStrategy Inc. bought another $2.1 billion in bitcoin as its combination of equity and fixed-income sales to fund its rapidly expanding acquisitions comes under increased scrutiny.

• Apollo Global Management Inc. was added to the S&P 500 in the latest quarterly weighting change, joining alternative asset manager Blackstone Inc. on the world’s most-watched stock gauge. Workday Inc. was also included.

• Warner Bros. Discovery Inc. has an early extension of an agreement to provide networks such as TNT and CNN to Comcast Corp.’s roughly 12.8 million cable TV customers. reached.

• Nippon Steel Corp. has announced its spending plans for U.S. steel mills owned by United States Steel Corp. clarified as part of a final effort to rally workers and politicians to his bid to buy the Pittsburgh-based steelmaker.

Important events this week:

• China trade, Tuesday

• Tariff decision for Australia, Tuesday

• US CPI, Wednesday

• Canada interest rate decision, Wednesday

• ECB interest rate decision, Thursday

• US initial jobless claims, PPI, Thursday

• Eurozone industrial production, Friday

Some of the key moves in the markets:

Shares

• The S&P 500 fell 0.6% as of 4 p.m. New York time

• The Nasdaq 100 fell 0.8%

• The Dow Jones Industrial Average fell 0.5%

• The MSCI World Index fell 0.5%

Currencies

• The Bloomberg Dollar Spot Index rose 0.1%

• The euro fell 0.2% to $1.0551

• The British pound was little changed at $1.2749

• The Japanese yen fell 0.8% to 151.19 per dollar

Cryptocurrencies

• Bitcoin fell 3.9% to $96,179.07

• Ether fell 6.3% to $3,741.5

Bonds

• The 10-year Treasury yield rose four basis points to 4.20%

• The 10-year German government bond yield rose one basis point to 2.12%

• The yield on 10-year British government bonds remained little changed at 4.27%

raw materials

• West Texas Intermediate crude oil prices rose 1.4% to $68.13 a barrel

• Spot gold rose 0.9% to $2,658.02 an ounce

This story was produced with support from Bloomberg Automation.

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