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Wall Street strategists predict continued gains for the S&P 500 in 2025, driven by solid economic growth, consumer resilience, and potential rate cuts from the Fed. However, concerns loom over Trump's tariff policies possibly igniting trade wars and inflation, while the tech sector's reliance on AI investments raises questions about returns on capital. The outlook remains cautiously optimistic, hinging on the interplay of these key factors.
The Federal Reserve is poised to implement a quarter-point rate cut in December, with a 96.9% probability, reducing the benchmark rate to 4.25%-4.50%. This marks a full percentage point decrease since September, reflecting ongoing efforts to manage economic conditions amid persistent inflation and strong growth.Despite these monetary policy changes, Bitcoin has shown remarkable resilience, trading above $100,000. Factors such as macroeconomic data and significant political developments, including President-elect Trump's nominations for key financial positions, are bolstering Bitcoin's potential strength heading into 2025.
Ethereum has surged nearly 60% since the recent election, benefiting from a favorable regulatory environment anticipated under the incoming Trump administration. With potential pro-crypto cabinet appointments and a shift to proof-of-stake, Ethereum's utility as a decentralized application platform is gaining traction, though it lacks Bitcoin's scarcity. Investors are advised to consider dollar-cost averaging due to possible near-term pullbacks, while Ethereum remains a long-term asset of interest.
The EUR/USD exchange rate has dipped to the bottom of its two-year range around $1.05, with expectations of a 25 basis point rate cut by the Fed. While a hawkish tone from Jerome Powell could strengthen the dollar, bearish sentiment on the euro suggests limited downside risk. Technical analysis indicates a favorable buying opportunity below $1.05, with targets set at $1.08 and a stop at $1.03.
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US stocks declined following mixed inflation reports and rising jobless claims ahead of the FOMC meeting. The ASX 200 also pulled back as strong labor data diminished expectations for an RBA rate cut. Key economic indicators are set for release next week, including US retail sales and central bank meetings in Australia, Japan, and the UK.
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Wall Street paused amid a higher-than-expected US producer price index and weaker jobless claims, yet a year-end rally remains possible. Key events include the Fed's anticipated 25 bp rate cut, the BoJ's potential rate hike with dovish guidance, and the BoE's expected hold at 4.75%. Additionally, the US core PCE price index is projected to rise to 2.5% in November.
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Major equity indexes closed lower amid global uncertainty, with S&P 500 earnings forecasts revised down by 0.5%. The Nasdaq Composite fell 0.6%, while Hershey's stock surged 10.9% on acquisition talks with Mondelez. Nvidia's stock dropped 2.6% due to a Chinese investigation into its business practices. As the Federal Reserve enters a blackout period ahead of its December meeting, CPI data due Wednesday could influence interest rate decisions, with expectations of a potential 25-basis-point cut.
MicroStrategy has purchased 21,550 Bitcoin for $2.1 billion at an average price of $98,783 each, bringing its total holdings to 423,650 BTC valued at $25.6 billion. Co-founder Michael Saylor remains bullish, predicting he will buy Bitcoin even at $1 million per coin and urging the U.S. government to sell its gold reserves to invest in Bitcoin as a hedge against inflation.
President-elect Donald Trump stated he will not attempt to replace Federal Reserve Chair Jerome Powell, whose term extends to May 2026. In an interview, Trump expressed confidence that Powell would remain in his position, despite their past conflicts over monetary policy. Trump has previously criticized Powell's decisions and suggested that the president should have a say in interest rate adjustments.
Donald Trump has stated he has no intention of replacing Jerome Powell as Federal Reserve Chair upon his return to the White House, expressing, “I don’t see it.” Powell has asserted his commitment to the Fed's independence, indicating he would not resign if asked by Trump, who has previously claimed a right to influence monetary policy without direct authority over it.
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