Investors are closely monitoring the US economy as the Federal Reserve prepares for its final meeting of the year, with inflation, employment, and a tech-driven stock market rally in focus.
Inflation data, particularly the Consumer Price Index (CPI) and Producer Price Index (PPI), will significantly influence the Fed's decision on a potential rate cut on December 18. Economists predict a slight increase in annual CPI to 2.7%, suggesting persistent inflation pressures. The market anticipates a 0.25% rate cut, but stronger inflation could alter this expectation.
The tech sector, led by companies like Apple and Amazon, continues to drive the stock market rally, with the Nasdaq Composite rising over 3% last week. This reflects strong earnings and fundamentals, although some experts call for broader market participation.
In November, the labor market added 227,000 jobs, slightly exceeding expectations, but the unemployment rate rose to 4.2%. This indicates a softening yet resilient labor market, supporting cautious Fed rate cuts.
While tech stocks surged, the Dow Jones Industrial Average fell 0.5% last week, highlighting sectoral divergence. The Fed meeting is a critical event, with inflation trends shaping future policies. Investors hope for a supportive Fed stance to maintain economic and market stability.