Jobs Report Sets the Stage for 2025's First Trading Week: What to Watch
U.S. stocks have been in decline as we approach the initial full trading week of 2025.
Over the last five trading sessions, the S&P 500 has dropped more than 1.5%, while the Nasdaq Composite has decreased nearly 2%. Additionally, the Dow Jones Industrial Average has fallen by about 1.5%.
This coming week, investors will be focused on significant labor market data, with the December jobs report from the Bureau of Labor Statistics on Friday morning being the most anticipated release. Information about job openings, private wage growth, and services sector activity will also be part of the week's schedule.
These figures will offer the final perspective on the labor market before the Federal Reserve's upcoming meeting on January 30-31.
In corporate developments, key announcements from tech firms like Nvidia (NVDA) are expected at the Consumer Electronics Show. Furthermore, earnings reports from Delta (DAL) and Constellation Brands (STZ) are anticipated.
The week will be shorter for stock trading as markets will close on Thursday in honor of former President Jimmy Carter.
A Focus on the Labor Market
The labor market experienced a cooling period through 2024, yet the Federal Reserve seems optimistic about its direction.
During his last press conference of the year on December 18, Fed Chair Jerome Powell characterized the overall labor market as "good," pointing out that the "downside risks" noted over the summer of 2024, when the unemployment rate surged, "seem to have lessened."
"The labor market is now looser compared to the pre-pandemic period, and it continues to cool gradually and systematically," Powell stated. "We believe further labor market cooling is unnecessary to achieve our 2% inflation target."
Economists forecast the forthcoming data to reveal continued, gradual cooling. The December jobs report is anticipated to show the addition of 153,000 jobs in the U.S., a decrease from the 227,000 jobs added in November. The unemployment rate is expected to remain steady at 4.2%.
"The labor market is stable, but employment growth has moderated and overall market conditions eased in 2024," wrote Morgan Stanley U.S. economist Sam Coffin in a client note. "Encouragingly, the labor market isn't softening abruptly as it seemed to the previous summer."
As of Friday afternoon, markets reflected just an 11% likelihood of a Fed rate cut at its January meeting, according to CME FedWatch Tool.
A Pivotal Week for Technology
The CES tech conference begins on Monday with a keynote from Nvidia CEO Jensen Huang, followed by an analyst Q&A session on Tuesday.
Nvidia's stock has declined by more than 1% since it reported earnings on November 20, amid concerns about shipping delays of its new Blackwell chip, though Nvidia's shares completed 2024 with an increase of over 150%.
Bank of America's Vivek Arya explained to Brian Sozzi on the Opening Bid podcast that both market trends and specific issues affecting Nvidia contributed to the recent stock sell-off. "We've observed a capital shift from semiconductors to software," Arya noted, highlighting that software faces fewer US trade restrictions linked to goods exchanged with China.
For Nvidia, he added, "The past two quarters have been challenging as they transition from one product generation, Hopper, to another."
