As investors gear up for a shortened trading week, the start of January has been somewhat unpredictable, bringing with it a murky outlook and an important jobs report on the horizon. Though stocks had a rocky opening session this year, they managed to recover with notable gains by Friday. However, what’s missing is the “Santa Claus” rally—a phenomenon where stock prices tend to rise during the last five trading days of one year and the first two of the next. This absence has dampened spirits, marking a gloomy start to 2025 following a particularly weak finish last year. Investors are now on edge, keenly observing the rest of the month, as historically, January often sets the tone for the year. According to the Stock Trader’s Almanac, January’s performance has dictated the market’s direction in 14 of the last 18 post-presidential election years, with every negative January since 1950 signaling a bear market, no movement, or a 10% market correction.
The beginning of this week also marks the end of the first five trading days of January—an early indicator of how this month might unfold for the market. “The main question on investors’ minds is, ‘What does a lackluster Santa Claus Rally mean for January’s first five trading days? What implications do these five days have for the entire month? And what does the full month suggest for the rest of the year?’” explains Sam Stovall, the chief investment strategist at CFRA Research. He added, “I believe that January is going to be a vital measure for the whole year.”
Despite Friday’s gains, stocks closed the week at a loss. The Dow Jones Industrial Average dipped 0.6% while the S&P 500 and Nasdaq Composite each declined by 0.5%. Noteworthy is that the New York Stock Exchange will not open on Thursday, January 9, as the country commemorates the passing of former President Jimmy Carter—a practice last observed in December 2018 for George Herbert Walker Bush.
Next week will also deliver the December jobs report, one of the final significant data points ahead of the Federal Reserve’s meeting at the month’s end. Along with the upcoming inflation statistics, this report could potentially outline the course for interest rate cuts this year. Analysts estimate that job growth slowed in December, anticipating a rise of 160,000 nonfarm payrolls compared to 227,000 from the prior month. The unemployment rate is expected to remain steady at 4.2%. These figures are not anticipated to sway the central bank’s choices, with the market predicting a 90% chance that rates will remain unchanged, holding steady between 4.25% and 4.5% at the January meeting’s conclusion on the 28th and 29th, according to the CME FedWatch Tool.
A jobs report that meets expectations or falls short could ease the nerves of investors anxious for signs of a cooler labor market. Conversely, a report showing higher-than-expected job growth might unsettle investors, potentially pulling stocks down. Adding to this, minutes from December’s Fed meeting are also set to be released. Stovall cautions, "The prospect of two rate cuts seems to be priced in already. The real worry might be the risk that no cuts are enacted or just one, which remains a concern for the market."
Here’s a quick look at the schedule for the week ahead, with all times stated in Eastern Time:
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Monday, Jan. 6:
- 9:45 a.m. — PMI Composite final (December)
- 9:45 a.m. — S&P PMI Services final (December)
- 10 a.m. — Durable Orders final (November)
- 10 a.m. — Factory Orders (November)
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Tuesday, Jan. 7:
- 8:30 a.m. — Trade Balance (November)
- 10 a.m. — ISM Services PMI (December)
- 10 a.m. — JOLTS Job Openings (November)
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Wednesday, Jan. 8:
- 8:15 a.m. — ADP Employment Survey (December)
- 8:30 a.m. — Jobless Claims (week ending 12/28)
- 2 p.m. — FOMC Minutes
- 3 p.m. — Consumer Credit (November)
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Thursday, Jan. 9:
- 10 a.m. — Wholesale Inventories final (November)
- Note: The stock market will be closed.
- Earnings Report: Constellation Brands
- Friday, Jan. 10:
- 8:30 a.m. — December Payrolls
- 10 a.m. — Michigan Sentiment preliminary (January)
- Earnings Report: Walgreens Boots Alliance, Delta Air Lines
This lineup promises an eventful and possibly decisive week for market-watchers.
