As November draws to a close, the three major U.S. stock indices weakened in the first half of the month. However, with growing market expectations for an interest rate cut by the Federal Reserve and a temporary halt to the sell-off driven by investor concerns over an AI bubble, the three indices collectively rebounded in the second half of the month.
Notably, in the U.S. stock market, December is typically one of the best-performing months of the year, with most of the gains often occurring in the second half of the month. This phenomenon is largely attributed to a seasonal trend on Wall Street known as the "Santa Claus Rally." Historically, during the seven trading days following Christmas—comprising the last five trading days of the year and the first two trading days of the new year—investors tend to go long, and U.S. stocks are highly likely to rise. These seven days are referred to as the "Santa Claus Rally."
Looking ahead to December, investors will witness the Federal Reserve's final interest rate decision of the year, key economic data released after the end of the U.S. government shutdown, and the latest quarterly earnings reports from high-profile companies such as Broadcom and Micron Technology.
At 23:00 Beijing time on December 1, the U.S. ISM Manufacturing PMI data for November will be released.At 21:15 Beijing time on December 3, the U.S. ADP employment numbers for November, often referred to as the "mini non-farm payroll," will be announced.
At 3:00 AM Beijing time on December 11, the Federal Reserve will announce its interest rate decision; half an hour later, Powell will hold a press conference on monetary policy.
According to the CME Group’s FedWatch tool, the market currently estimates a roughly 15% probability that the Federal Reserve will keep interest rates unchanged in December, while the likelihood of a 25-basis-point rate cut stands at 85%, significantly higher than about 30% a week ago.
Recent statements from Federal Reserve officials highlight deep divisions, with an intense debate ongoing over whether persistently above-target inflation or a weak labor market poses a greater risk to economic balance. Complicating matters further, the data-driven Federal Reserve has been forced to make decisions based on less economic information due to the prior government shutdown.
After the US stock market closes on December 11 EST (December 12 Beijing time), the chip giant $Broadcom (AVGO.US)$will announce its latest quarterly earnings.
Broadcom's share price closed at a record high on Wednesday. Analysts at Goldman Sachs noted that Broadcom’s upcoming quarterly results will show solid performance, with AI demand expected to remain robust in the fourth quarter. Given significant investments by key customers, guidance for the first fiscal quarter is anticipated to exceed market expectations – and the updated AI revenue guidance for fiscal year 2026 is projected to reflect a year-over-year increase of over 100%.
At 21:30 Beijing time on December 16, the US November non-farm payroll data and unemployment rate will be released.
The US Bureau of Labor Statistics (BLS) stated it will not issue the October non-farm payroll report but will instead incorporate the relevant employment data into the November report. The November non-farm payroll report will be released on December 16, more than a week later than originally planned. The delay and cancellation of labor market data have posed challenges for the Federal Reserve’s monetary policy, as it deprives the Fed of crucial economic data ahead of the December interest rate meeting, which it relies on to guide its rate decisions.
After the US stock market closes on December 17 EST (December 18 Beijing time), the memory leader $Micron Technology (MU.US)$ will release its latest quarterly earnings results.
At 21:30 Beijing time on December 18, the US November CPI data will be released.
The U.S. Bureau of Labor Statistics canceled the October Consumer Price Index (CPI) report due to the unavailability of some survey data during the government shutdown, marking the first time in history. The Bureau stated that it would release the October figures in the November CPI report 'where possible.' The November CPI has been postponed to December 18, which means the Federal Reserve will lack key inflation data when making its interest rate decision in December.
At 3:00 PM Eastern Time on December 24, U.S. stocks closed three hours early ahead of Christmas; on December 25, U.S. stock markets were closed for the Christmas holiday.
At 3:00 AM Beijing Time on December 31, the Federal Reserve released the minutes of its monetary policy meeting.
Additionally, U.S. President Trump is expected to nominate the next Federal Reserve Chair in December. U.S. Treasury Secretary Bessent indicated that President Trump is anticipated to decide on the nominee for the next Federal Reserve Chair before the Christmas holiday. The widely recognized final shortlist includes: Federal Reserve Governors Waller and Bowman, former Federal Reserve Governor Warsh, National Economic Council Director Hassett, and Blackrock executive Riddell.
Further Reading:Hassett Emerges as Leading Candidate for Fed Chair! Market Buzz: With Powell’s Exit, Could Rate Cuts Start at 50 Basis Points?
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Editor/jayden