John Hancock: Weekly Market Recap Week Ended December 20

Fed turns hawkish

The major U.S. stock indexes fell around 3% to 4% and bond yields surged after the U.S. Federal Reserve on Wednesday afternoon indicated that it’s likely to cut interest rates less than previously expected in 2025. The Fed approved a widely anticipated quarter-point rate cut, but its forecast for two further cuts next year marked a retreat from earlier expectations for about four.

GDP momentum

The U.S. economy’s third-quarter growth was stronger than initially estimated, as the government reported on Thursday that GDP grew at an annual rate of 3.1%. That was up from an earlier estimate of 2.8% and the second quarter’s 3.0% growth. GDP growth has now topped 2.0% in eight of the last nine quarters.

Dollar surges

The value of the U.S. dollar surged relative to other currencies after the U.S. Federal Reserve on Wednesday embraced a more hawkish outlook for further rate cuts. Relative to other major currencies, the dollar rose more than 1% to its highest level since November 2022.

Light calendar

The last days of 2024 will be light in terms of economic reports. However, a report on consumer confidence will be issued on Monday, followed by Tuesday releases on new home sales and durable goods. Looking further ahead into the following week, watch for reports on pending home sales on Monday, December 30, and home prices on Tuesday, December 31.

Source: https://www.jhinvestments.com/