Last week saw a market rebound as traders repositioned ahead of the holiday period amid growing optimism about an interest rate cut in December. According to CME Group, the probability of a December rate reduction has risen to 86.4% after recent economic releases. The Federal Reserve’s policy meeting is scheduled for December 10th, leaving economic data as the primary near-term focus.

Key U.S. reports slated for the coming days include the following items, which market participants will be parsing for implications ahead of the Fed decision:

• S&P final U.S. manufacturing PMI (Mon)
• ADP employment data (Wed)
• Initial jobless claims (Thu)
• U.S. trade deficit (Thu)
• PCE index / inflation data (Fri)
• Consumer sentiment (Fri)

Federal Reserve Chair Jerome Powell is scheduled to speak on Monday night. In his previous remarks he noted weakness in the labor market and said the recent government shutdown had complicated the Fed’s decision-making. Since that speech the government has reopened and additional data have been released; the newer data have been interpreted by markets as supportive of a rate cut.

Online spending on Black Friday reached $11.9 billion, a 9.1% increase from the prior year. That outcome comes despite consumer sentiment remaining near historic lows and signs of strain in the labor market. Consumer expenditures account for roughly 70% of U.S. GDP, making retail activity a significant data point for overall economic assessment.

Market attention has centered on whether SPY can reach 700 before year-end. The option chain expiring on December 31st implies a +/- $27 move. The index is trading close to its record highs in the 686.00-690.00 range, which represents a resistance band to clear before 700.00+ would be attainable.

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