The holiday season is often a quiet, positive time for the financial markets. The phrase “Santa Claus Rally” was coined in the early 1970s to reflect the stock market’s upward bias during the November-January stretch.1
But this year, the markets might face some crosswinds as we travel through the holidays.
The stock market initially reacted well to news that President Biden will nominate Jerome Powell to lead the Federal Reserve for a second term. But trading became choppy as the session continued.2
Next up, the markets may react to an active December legislative calendar. Between today and New Year, Congress is preparing to work on the federal budget, the debt ceiling, and the Build Back Better plan.
Economic news also may influence trading in the weeks ahead. For example, the next reading on inflation (Consumer Price Index) releases on Friday, December 10.3
Last, COVID-19 continues to be unpredictable. Many states have seen an uptick in infections in recent weeks, and a few nations have adopted more aggressive lockdowns to help manage the most recent wave.4
1. CNBC.com, November 22, 2021
2. CMEGroup.com, 2021
3. BLS.gov, November 10, 2021
4. APNews.com, November 20, 2021
Investing involves risks, and investment decisions should be based on your own goals, time horizon, and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.
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