Source: Zhitong Finance "Since 1950, the S&P 500 index has risen more than 10% 21 times as of the end of May. In about 90% of these cases, the S&P 500 index rose for the rest of the year. There were only two instances of declines for the rest of the year, in 1987 (-13%) and 1986 (-0.1%)." With the rebound of the stock market, the old adage "Sell in May and Go Away" seems to have been a bad advice once again. Last month, the S&P 500 index rose 4.8%, the best May performance since 2009. The NASDAQ 100 index rose nearly 6.2%, and the NASDAQ Composite Index rose 6.9%. Goldman Sachs FICC & Equities Trading Division said: "History doesn't really support this saying. Don't sell, leave the market (go on vacation), and enjoy the good times." The rising trend is still to be continued? If history is any guide, it may indicate that the rise of the stock market is not over yet. Looking ahead to the rest of 2024, Scott Rubner, Managing Director of the Goldman Sachs Global Markets Division and tactical expert, pointed out the following historical background for investors. Rubner stated that the S&P 500 index has risen 10.7% year-to-date, and since 1950, the S&P 500 index has risen more than 10% 21 times as of the end of May. In about 90% of these cases, the S&P 500 index rose for the rest of the year. There were only two instances of declines for the rest of the year, in 1987 (-13%) and 1986 (-0.1%). "Since 1950, the median return of the last 7 months of each year (June 1 to December 31) is 5.4%. In the aforementioned 21 cases, the average performance of the last 7 months increased to 8.1%." Rubner added. Rubner also pointed out that the NASDAQ index has risen for 16 consecutive Julys, with an average return of about 4.64%.

The Federal Reserve will welcome a series of employment market data next week, which will provide important basis for its next decision. Despite the limited reliability of government data, it is expected that this data will further reveal the trend of the job market slowing down.

Employment market data and interest rate cut prospects.

Next Friday's November employment report is expected to correct the distorted data caused by hurricanes and strikes in October. In October, non-farm employment only increased by 12,000 people, with private sector employment decreasing by 28,000 people, mainly affected by hurricanes Helene and Milton as well as the Boeing (BA.US) strike. According to Bloomberg's survey, non-farm employment in November is expected to rebound to 190,000 people, higher than the average level of the past 12 months. This data will be a key consideration for the Federal Open Market Committee (FOMC) meeting on December 17-18.The Federal Open Market Committee (FOMC)basis for important decisions at the Federal Open Market Committee (FOMC) meeting on December 17-18.

In addition, the Job Openings and Labor Turnover Survey (JOLTS) data to be released next Tuesday will also provide more clues about the employment market. This data has a smaller impact on the market but is still an important reference for observing employment market dynamics.

Unemployment rate slightly rises while layoffs remain low.

The unemployment rate in October was 4.1%, while it may slightly rise to 4.2% in November. Although the unemployment rate has risen by 0.5 percentage points from the cycle low, it does not reflect a situation of mass layoffs. Data shows that the number of new unemployment benefit claims remains at a historical low, with a four-week average of 217,000, close to the lowest level since the 1960s.

However, JOLTS data shows that despite fewer layoffs, hiring activity has fallen to its lowest level since 2014 (excluding the COVID-19 pandemic). In September, job vacancies decreased by 0.5 million to 7.5 million, and the ratio of job openings to unemployed people dropped from a peak of 2:1 in 2022 to 1.1:1. Economists at jpmorgan stated that the rise in unemployment is mainly due to a decrease in job-seeking success rates, rather than an increase in job losses.

The impact of inflation pressures and tariff policies.

Despite the employment market remaining healthy, the trend of cooling inflation is not obvious. In October, the personal consumption expenditures (PCE) index rose by 0.2% month-on-month, and core PCE (excluding food and energy) increased by 0.3%, both in line with expectations. However, core PCE rose by 2.8% year-on-year, up from 2.7% in September. Additionally, the "super core" service PCE (excluding housing effects), considered an important indicator of core inflation by Federal Reserve Chairman Powell, rose by 0.4% month-on-month in October, with its year-on-year growth rate increasing from 3.2% in September to 3.5%, indicating that inflation pressures are still intensifying.

Meanwhile, the new government's trade policy may further drive up commodity prices. Recently, Trump stated that he would increase tariffs on imported goods from Canada and Mexico by 25% on his first day in office and impose an additional 10% tariff on Chinese goods, which may impact inflation trends.

Market expectations and policy outlook.

Based on the stability of the employment market and the persistence of inflation, the market generally expects the Federal Reserve to lower the federal funds rate target range by 25 basis points from the current 4.50%-4.75% at its December meeting. According to the cme FedWatch tool, as of last Friday, the market's pricing probability for this outcome is 66.3%.

However, for the policy path in 2025, the market currently only expects two 25 basis point rate cuts, while the Federal Reserve's economic forecast from the September meeting anticipated four rate cuts next year. This reflects that the current healthy employment market, ongoing inflation pressures, and uncertainty surrounding the new government's policies may limit the scope for rate cuts.

Overall, the resilience of the employment market and inflation above target levels may lead the Federal Reserve to adopt a more cautious path for rate cuts. Upcoming economic data will continue to dominate policy direction, and the extent and frequency of rate cuts in December still require further confirmation.

Editor / jayden