4 Major Events Hit With the Market at a Key Juncture
An important week lies ahead and news will play a huge part in deciding where stocks are headed in the final months of the year.
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It will be an eventful week for the market as investors consider four major news events. This news flow will play a large part in determining if a market top is forming or whether conditions are ripe for a strong rally to conclude the year.
The S&P 500 moved to a new all-time high on Friday following a better-than-expected CPI report. The critical technical issue now is whether or not strong upside momentum is building, which will carry into the holidays with a boost from positive seasonality, or will this be a failed breakout and a trap for the bulls?
There are four major events occurring this week. The first is earnings from five of the Magnificent Seven (MAGS) names along with hundreds of other reports, the second is the Fed interest-rate decision, the third is a meeting between President Trump and President Xi on China trade, and the fourth is negotiations on the government shutdown.
Earnings season so far has been better than expected overall, but Netflix (NFLX) , Tesla (TSLA) , and IBM (IBM) sold off initially, suggesting nervousness about expectations. The response to reports will tell us a lot about market expectations and sentiment. The bears and pessimists will be looking for a sell-the-news reaction, while the bulls will be looking for very strong dip buying as well as some chasing. The big question for many investors will be whether or not AI is still at an early stage or is it in a bubble, as many bears have declared.
The second key event is the Fed, which meets on Wednesday. A quarter-point cut is a near certainty, but what will matter the most is the tone of Fed Chair Powell’s press conference. It is likely he will remain noncommittal about future cuts due to a lack of data, but if he emphasizes the slowing of the labor market and is sanguine about inflation, then expectations for a dovish bias will flourish.
The third event is the China trade. Treasury Secretary Bessent and Beijing have stated that the framework for a deal is in place and that a productive meeting between Trump and Xi is likely to occur later this week. This will remove substantial uncertainty and the skepticism about the effectiveness of Trump’s tariff policies.
A fourth event that may have an impact on the market is the government shutdown, although investors have been largely unconcerned about this issue. It is dragging out and will start to have greater repercussions if not resolved. Pressure is building on both sides to do something. If any progress is made at all, it will be further fuel for a market uptrend.
Technically, the market has recently gone through an elevated phase of volatility, but it was resolved favorably with the upside breakout on Friday. The bulls are in position to squeeze the bears, produce some FOMO, and generate positive momentum. If the news flow is positive, there won’t be much to stop this market.
I’ll be out for a few days and will see you again on Wednesday afternoon.
At the time of publication, Rev Shark had no positions in any securities mentioned.
