US stocks have been slumping headed into the primary full week of 2025.
Up to now five trading sessions, the S&P 500 is down greater than 1.5% while the Nasdaq Composite is off nearly 2%. Meanwhile, the Dow Jones Industrial Average is lower by about 1.5%.
Within the week ahead, an important run of labor market data is about to greet investors, with Friday morning’s December jobs report from the Bureau of Labor Statistics serving because the week’s most significant release. Updates on job openings and personal wage growth, in addition to readings on activity within the services sectors, are also on the schedule.
The week ahead will provide a final snapshot of the labor market before the Fed’s next meeting on Jan. 30-31.
In corporate news, investors will look ahead to key announcements from tech corporations akin to Nvidia (NVDA) throughout the Consumer Electronics Show. Meanwhile, Delta (DAL) and Constellation Brands (STZ) are expected to report quarterly results.
In his final press conference of the yr on Dec. 18, Fed Chair Jerome Powell described the labor market overall as “good,” noting that the “downside risks” that emerged in the summertime of 2024 because the unemployment rate spiked “appear to have diminished.”
“The labor market is now looser than pre-pandemic, and it’s clearly still cooling further, to this point in, in a gradual and orderly way,” Powell said. “We don’t think we want further cooling within the labor market to get inflation all the way down to 2%.”
Economists expect incoming data to point out more gradual cooling. The December jobs report is anticipated to point out the US labor market added 153,000 jobs within the month, down from the 227,000 seen in November. Meanwhile, the unemployment rate is anticipated to carry regular at 4.2%.
“The labor market is on solid footing, but employment growth slowed and overall labor market conditions cooled in 2024,” Morgan Stanley US economist Sam Coffin wrote in a note to clients. “The excellent news is the labor market shouldn’t be softening as suddenly because it appeared to do last summer.”
As of Friday afternoon, markets were pricing in only an 11% likelihood the Fed cuts rates at its January meeting, per the CME FedWatch Tool.
The CES tech conference kicks off on Monday with a keynote speech from Nvidia CEO Jensen Huang. An analyst query and answer session can also be slated for Tuesday.
Nvidia stock is down greater than 1% since reporting earnings after the bell on Nov. 20 amid concerns over delays of shipments of its recent Blackwell chip. Nvidia shares still ended 2024 up greater than 150%.
Bank of America’s Vivek Arya told Brian Sozzi on the Opening Bid podcast Thursday that broader market forces and company-specific issues drove the sell-off in Nvidia stock late last yr. “What now we have seen out there is a rotation of cash from semiconductors to software,” Arya said, noting that the latter was less exposed to US trade restrictions on goods to and from China.
He added that for Nvidia, “the last two quarters haven’t been clean, really, because they are going through growing pains from one generation of product that was Hopper to the brand new generation of product.”
The historically best seven-day stretch of the yr for the S&P 500 got here and went with none gains. Since 1950, the S&P 500 has risen 1.3% throughout the seven trading days starting Dec. 24 amid the so-called Santa Claus rally.
But this yr, the index fell about 0.5%. LPL Financial chief technical strategist Adam Turnquist wrote in a note to clients that when the S&P 500 has a negative return over this time period, it often points to a weaker yr for stocks.
Though, as we noted last week, last yr didn’t feature a Santa Claus rally either, and the S&P 500 still rose roughly 24% in 2025.
“I do not understand how far the market falls from here,” Ritholtz Wealth Management chief market strategist Callie Cox told Yahoo Finance. “I actually don’t assign an excessive amount of weight to seasonal patterns. Simply because the market is falling throughout the Santa Claus rally period doesn’t suggest that we’re doomed.”
One key catalyst could include next week’s jobs report. As a recent rise within the 10-year Treasury yield (^TNX) near 4.6% has helped contribute to the sour sentiment around stocks, Piper Sandler chief markets strategist Michael Kantrowitz believes relief might be on the best way.
“We expect we want to see softer employment to get rates to begin coming down,” Kantrowitz said in a video to clients on Friday.
Whether the soft data is available in the week ahead or later in the primary quarter, Kantrowitz believes this narrative shift from the rising rate environment could help “get equities going once more.”
Monday
Economic data: S&P Global US manufacturing PMI, December final (58.3 expected, 58.5 previously); S&P Global US composite PMI, December final (56.6 previously); Factory Orders, November (-0.3% expected, +0.2% prior); Durable Goods Orders, November final (-0.3% expected, -1.1% prior)
Earnings: No notable earnings releases.
Tuesday
Economic data: Job openings, November (7.7 million expected, 7.74 million previously); ISM Services Index, December (53.1 expected, 52.1 prior)
Economic calendar: Nonfarm payrolls, December (+153,000 expected, +227,000 previously); Unemployment rate, December (4.2% expected, 4.3% previously); Average hourly earnings, month-over-month, December (+0.3% expected, +0.4% previously); Average hourly earnings, year-over-year, December (+4% expected, +4% previously); Average weekly hours worked, December (34.3 expected, 34.3 previously); Labor force participation rate, December (62.5% previously)