The stock market experienced a decline on Tuesday as well as Wednesday, 17th & 18th December 2024 as investors geared up for the Federal Reserve’s final policy meeting of 2024. Expectations are high that the Fed will announce a quarter-point interest rate cut at the conclusion of the meeting on Wednesday. Let us know more about it with the best online trading platform in India!

Market Movements and Retail Sales Impact

The Federal Reserve’s two-day meeting commenced on Tuesday, with strong market confidence in a 25-basis-point rate cut. According to the CME FedWatch Tool, the probability of this cut stood at 95.4%. However, this figure slightly dipped from near certainty after the release of stronger-than-expected November retail sales data.

Retail sales for November showed a solid performance, primarily driven by robust vehicle purchases and overall consumer spending strength. This indicates that consumers remain active despite the broader economic uncertainties.

A leading analyst commented, “The consumer is alive and well. When the labour market is strong, and households are not overstretched, people spend. Gains were seen across categories, including electronics, health, and personal care. This strong consumer activity is good news for companies aiming to meet revenue expectations.”

This consumer resilience hints at an economy that remains robust, potentially reducing the urgency for the Federal Reserve to implement further rate cuts in the near future. The combination of economic strength and evolving inflation patterns has prompted some economists to reassess their more dovish projections for 2025.

Shifting Expectations for January 2025

The likelihood of the Fed pausing rate cuts at its January meeting has risen steadily. As of Tuesday, the probability of a pause was nearly 80%, up from about 70% just a week earlier.

US Stock Market Performance

Here’s how the major US indexes performed shortly after the markets opened on Tuesday:

• S&P 500: 6,052.60, down 0.35%
• Dow Jones Industrial Average: 43,472.92, down 0.56% (-244.56 points)
• Nasdaq Composite: 20,109.68, down 0.33%

What Else Is Making Headlines?

Several other market developments are grabbing attention:

• A potential “Santa rally” in stocks hinges on the Fed meeting market expectations, according to Bank of America.
• Some US states are already laying the groundwork for their own strategic bitcoin reserves.
• Bank of America suggests the ongoing rally in chip stocks may expand beyond AI-related gains in 2025.
• A detailed analysis of Wall Street’s S&P 500 targets for 2025 has been released.
• Interactive Brokers’ chairman warns that a bitcoin crash could pose a significant threat to the stock market next year.

Commodities, Bonds, and Cryptocurrency Update

Here’s how key commodities, bonds, and cryptocurrencies fared on Tuesday:

• Oil: West Texas Intermediate crude fell by 1.26% to $69.80 per barrel, while Brent crude dropped 1.15% to $73.06 per barrel.
• Gold: The price of gold slid by 0.76% to $2,650.20 per ounce.
• Bonds: The 10-year Treasury yield remained flat at 4.403%.
• Bitcoin: The cryptocurrency rose 1.27% to $107,513.

Conclusion

As the Federal Reserve’s last meeting of the year unfolds, market participants are keenly watching for the anticipated interest rate cut and its potential implications for the economy. While consumer spending remains a bright spot, its strength could lead the Fed to reassess the pace of rate adjustments going forward. Meanwhile, stock indexes, commodities, and cryptocurrencies continue to react to both economic data and broader market expectations.

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