Wall Street started the year on the right foot, bringing home decent gains in the first week of trading. A performance that hinges on perspectives relating to Trump’s future economic policy, in view of his next inauguration, and on labor market data, which will give more precise indications on the Federal Reserve’s future moves.
Trump’s tariff policy
The US market is betting first and foremost on one Trump’s more moderate policy on the subject of duties. According to rumors from the Washington Post, the President-elect is considering imposing “selective” duties on critical imports such as aluminum and copper, but also medical supplies, energy materials, batteries, rare earths and photovoltaic panels, avoiding a policy of “universal” tariffs equal to 10-20% on all imported products.
But it is also true that Trump has already denied this indiscretion with a post on social media, stating that it will move forward with rigid tariff policies, particularly towards some countries such as China and Mexico and Canada.
Expectations for the Fed
Another theme that dominates the first days of the year is… Fed policy for the new year. A policy that will certainly depend on Trump’s economic policy choices, not only on duties, but also on other economic-fiscal issues, given that his approach is favorable to a widening of the deficitt, even at the cost of one higher inflation. For this reason, the year will be characterized by a more cautious Fed, which will only cut rates by 75 points.
However, the choices of the central bank will also be conditioned by labor market situationanother parameter observed based on the Fed’s dual mandate. The first data of the year will arrive this Friday with the usual monthly employment reportwhich based on prevailing expectations should show the creation dthe 154,000 places jobs in December, while the unemployment rate is expected to remain stable at 4.2%.
Watch out for the Minutes
We will also know more about the Federal Reserve’s next moves FOMC meeting minutes of 17-18 December, released on Wednesday evening. Meeting during which the Fed announced the last cut of the year, equal to 25 basis points, anticipating greater prudence in 2025.
Profit growth is the engine of growth
Expectations at the beginning of the year indicate a positive performance for US markets. “In 2025, we expect the S&P 500 to rise 11%, rising to 6,500 by the end of the year. There earnings growth will be the main driver performance,” said a Goldman Sachs analyst.
The second week on Wall Street opened with numbers from Constellation Brands, Walgreens Boots Alliance and Delta Air Lines, while the good results of the Chinese Foxconn gave wings to some big tech companies such as Nvidia, Broadcom and Micron Technology.
