Often, the first week of a new year is fairly quiet. Wall Streeters are coming back from ski trips or trips to sunny climes. The holidays have reduced energy levels.
So, it takes a little while for the Street machinery to build back up.
The Consumer Electronics Show in Las Vegas (running basically all week).
Minutes from the Federal Reserve meeting in December.
The big December jobs report.
The start of the fourth-quarter 2024 earnings season.
All of this in the context of two realities:
Stocks had a great 2024 but sagged a bit in December as interest rates climbed.
The inauguration of Donald Trump for a second presidential term is coming in three weeks, and what policies he will implement are still not clear.
Here's how to look at the week
First up: Jensen Huang at the Consumer Electronics Show
The founder and CEO of (NVDA) , the chipmaker most identified with artificial intelligence, will be Monday's keynote speaker at the annual Consumer Electronics Show in Las Vegas.
This is techland's big trade show, where companies showcase their latest products and offer hints of what's to come. About 130,000 people and 3,500 exhibitors will attend.
Huang will speak at 6:20 p.m. PT Monday at the Mandalay Bay Arena. He is expected to unveil a new super-fast graphics card that gamers and others have been waiting for and updates on the shipping schedules of the Blackwell family of graphic processing units. These are the products developers of artificial intelligence applications, including large language models like OpenAI's ChatGPT and Google's Gemini, have been salivating for.
Huang will speak not as an all-conquering hero but as one whose company's shares soared 239% in 2023 but then had to weather a volatile 2024.
Nvidia was twice the world's most valuable company. The shares rose 173% between the end of 2023 and June 18. They fell 27.5% between June 18 and Aug. 7. And rallied 35.8% between Aug. 7 and Dec. 31.
For all that, the shares ended up 171.2% for the year — where they were in June.
In the two days since New Year's, Nvidia's stock price jumped an additional 7.6%.
The CES conference officially starts on Tuesday and ends on Friday. One of the presentations many are looking for highlights laptops using Microsoft (MSFT) Windows and CoPilot, Microsoft's AI program. Manufacturers including Lenovo, HP, Dell, Samsung, Acer, and Asus are working on new machines.
The jobs report: the week's most important report
The Labor Department's jobs report is normally the first Friday of the month. The 2024 holiday calendar forced a week's delay.
The consensus is that the report will show 153,000 new jobs created in December 2024, with the unemployment rate holding at 4.2%, the same level as November. Look for the revisions on the most recent report, which said 227,000 jobs were created in November.
The jobs situation has moderated since June because many companies haven't needed to add staff. A bigger issue is that many companies, especially restaurants, bars, and other retail stores, have been cutting staff.
In addition, many jobs are dependent on a healthier real estate market. But rates on 30-year mortgages have been holding steadily at or just below 7%, the highest levels since July, despite recent Fed interest rate cuts.
Home buying activity remains slowed by stubbornly high mortgage rates.Shutterstock
The Fed opens a window into its thinking
If you're trying to predict where interest rates might be headed, the minutes of the Federal Reserve's December 17-18 meeting will provide some hints. They will be released Wednesday at 2 p.m.
At the December meeting, the Fed cut its key interest rate a quarter point to 4.25% to 4.5%, but Chairman Jerome Powell cautioned against thinking the central bank will be cutting rates rapidly in 2025.
Indeed, bond markets have been balking at pushing rates lower. The 10-year U.S. Treasury yield has risen from 3.623% before the Fed's September meeting to 4.602% as of Friday.
The problem is the continued stickiness of inflation. No one can say exactly what the problem is except shelter costs aren't falling and food prices are getting hit by odd things like bird flu. Bond investors are worried about U.S. government finances and the huge borrowings needed to keep the government operating.
The inflation stickiness has pushed the rates on 30-year mortgages to just about 7% from about 6.1% in early September.
The rate increase adds about $165 a month — nearly 11% — to the principal-and-interest payment on a $250,000 mortgage.
Anyone looking to buy or sell a home is painfully aware of the dilemma. If inflation erupts in 2025, the pain will be worse.
A pause to mark President Carter's death
The week will be disrupted on Thursday when stock markets and markets that trade stock derivatives close for former President Jimmy Carter's funeral.
The markets for Treasury securities will be open for just a half day. Futures markets that are not tied to stocks will operate as usual.
Get ready for the fourth quarter earnings reports
The earnings season starts this week and will pick up rapidly as January progresses.
This week's reports include second-quarter results on Tuesday from Cal-Maine Foods (CALM) , the nation's largest commercial producer of eggs. Analysts will want to know what problems the latest bird-flu outbreak has caused for the Mississippi-based company company.
Egg supplies nationally are tight, and prices have been rising. Cal-Maine's commercial egg-producing farms have been able to meet demand and enjoy higher prices. Shares jumped 79.3% in 2024 and 4.5% on Thursday and Friday.
Delta Air Lines (DAL) reports on Friday morning. The big airline shares were up 50% in 2024. The company has been able to capitalize on increasing business travel demand and, as important, increasing demand from high-income consumers. It has reinstated its dividend and has a fully-funded pension plan. It expects to report $5 billion in free cash flow this year.
Also reporting this week:
Wednesday: Albertsons (ACI) , the big supermarket chain whose deal to merge with Kroger (KR) was blocked in courts. Also: Jefferies Financial Group (JEF) , the Wall Street investment bank.
Thursday: Pharmacy giant Walgreens Boots Alliance (WBA) . Spirits and wine company Constellation Brands (STZ) . Home builder KB Home (KBH) .
It's not fair to call December's market performance a break. But it was a surprise.
The S&P 500 dropped 2.5% for the month, a touch more in the first two days of January. The Dow Jones industrials dropped 5.3% on the month.
The Nasdaq Composite posted a 0.5% gain for December, but after hitting an all-time intraday high of 20,205 on December 16, it slid below 20,000 by December 31.
Luckily, the averages all moved higher on Friday, though not enough to make the week positive.
What comes next is the waiting for Trump's inauguration on Jan. 20.
Plus, there is so much riding on the expansion of artificial intelligence applications and how they might profoundly boost productivity and economic output.
While Wall Street players are optimistic about January and beyond because of Trump's vows to cut regulation and taxes and the prospect of lower interest rates, there is a sense individual investors are not quite as bullish.
The American Association of Individual Investors' weekly survey of expectations shows overall bullishness sliding to 35.4% in the most recent week from 49.8% on Nov. 13 and a high for the year of 52.7% in mid-July. Bearishness has risen to 34.2% from 27.6% on Nov. 6.
The survey, released weekly since 1987, asks respondents if they're bullish, neutral, or negative on stocks for the next six months.
It's debatable whether individuals can affect markets that much anymore. Today, much of stock trading is dominated by large institutions and passive investing—mutual funds, hedge funds, and exchange-traded funds.
Plus, AAII peak bullish or bearish levels often signal a market turn. Right now, the AAII levels aren't extreme.
