NEW YORK- The coming week will give investors a fresh view into the health of the US economy with the release of a closely watched employment report that could help determine the trajectory of interest rates in the months ahead.
Stocks are heading into December with the benchmark S&P 500 near record highs following an over 25 percent year-to-date gain. Part of that performance has been fueled by expectations that the Federal Reserve will continue cutting interest rates into next year, after reducing borrowing costs by 75 basis points in 2024.
But uncertainty over the Fed’s rate trajectory has increased in recent months as a spate of robust economic data – including a blowout jobs report for September – stirs concerns that inflation could rebound if the central bank lowers rates too far, undoing two years of progress in tamping down prices.
While investors have largely welcomed evidence of economic strength, another round of strong jobs data on Dec. 6 could further erode expectations for Fed cuts and fuel wariness over inflation, investors said. The jobs data “is going to provide a more clear picture of the underlying trend, which is important as there’s a lot of debate and uncertainty around the path for interest rates by the Fed,” said Angelo Kourkafas, senior investment strategist at Edward Jones.
