Is the stock market ready for liftoff? 🚀

Good Afternoon!

Welcome to another edition of Premium Market Insights. I’m Adam Garcia.

Before we get started, I want to pass along my best wishes for the upcoming holidays. From me and everyone here at Elite Trade Club, thank you for your support!

With the pleasantries out of the way, let’s get down to business! My team and I have been monitoring the market closely. Here’s what we see:

Economic Outlook

Stocks rallied considerably this Wednesday on the back of positive news from the Federal Reserve, who maintained interest rates at their final policy meeting of the year. Inflation has been stable around 4%, and the Fed has penciled in four rate cuts for next year, assuming inflation continues along its current tract.

However, there are concerns about a slowing economy and the odds of a recession in the month’s ahead. A soft landing could prove to be more difficult than anticipated.

Geopolitical risks and volatility in the commodities market are also noteworthy risks to monitor as we head into the final weeks of the year.

Jobs Report

The latest US Jobs report was relatively solid and indicates that the US labor market may be in a healthier state. The US economy added 199,000 jobs last month, compared to only 150,000 in the previous month.

The unemployment rate also fell slightly in November for the first time in several months. It appears that the labor market is improving slightly and may not be at risk of overheating amid potential rate cuts in the future.

As we noted in the past, the US labor market is adding new jobs, but many of these jobs are concentrated heavily in several sectors. Over 80% of the news jobs registered fell into the following three categories: healthcare, government employment, and leisure/hospitality.

Overall, it appears that the labor market has improved slightly, and there could be room for rate cuts next year if inflation continues to improve. However, the Federal Reserve will likely hold rates steady for several more months, before considering rate cuts.

US inflation

The US CPI Index only rose by 3.1% YoY in November, which is a positive sign for the economy. Although this is far from the 2% target, these consistently lower ratings have allowed the Federal Reserve to avoid additional rate hikes.

Much of this improvement is attributable to the continued decline in energy prices. 

As seen in Wednesday’s market performance, the market will likely respond positively to positive inflation and interest rate announcements.

The End of Rate Hikes: A Global Trend Beginning?

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