What to Expect in December: 3 Things That Could Affect the Stock Market

In the last 10 days, the main measure of the stock market hasn't been moving much, staying within a small range of 1.4%. On Wednesday, for example, the S&P 500 (^GSPC) ended a bit lower by 0.38%.

Usually, December is a time when the stock market is not very active, and it tends to go up. But this year, because of the really good returns in November, it might be different.

There are three important things happening next week that could change how the stock market behaves. These are inflation, jobs, and decisions from the Federal Reserve. These things can make the market more interesting than usual.

On Friday, we'll get to know about jobs in November from the Bureau of Labor Statistics (BLS). This report has been a big part of why the stock market has gone up 18% this year. Last year was different, with a 5.46% loss for the year.

Next Tuesday, the BLS will also tell us about prices and inflation in November. This year, these reports have been good for investors, with an average gain of 0.45% each time. That's a change from last year when investors lost a total of 0.72%, and more than half the time, the reports were not good.

Then, on Wednesday, the head of the Federal Reserve, Jerome Powell, will talk about their decisions on interest rates. Last year, on days when the Federal Reserve made decisions, stocks gained 4.14%, even though they only won half the time. But this year, on average, stocks lost a bit on these days, totaling a loss of 1.05% for the year.

Because things have been calmer lately, the stock market might make a big move after these reports. While 2023 has mostly seen the stock market going up, other things like the bond market and the US dollar could make it harder for stocks.

Some people are betting that stocks might go down, especially because they are close to important levels. If something big happens, like surprising news, the market might drop more than usual because not many people are trading. But if the reports are good, people who bet against the market might end up helping the market go even higher, maybe reaching a new record by the end of the year or early 2024.

For short-term traders, it's a good idea to be careful if the S&P 500 goes down to 4,500. It could be a trick, and the market might actually go up, surprising those who thought it was going to fall.

Also Read: Mixed Signals in US Stock Futures as Investors Wait for Jobs News