①The S&P 500 index is expected to break through the 7,000-point mark by the end of 2025, reaching a new historical high; ②The minutes from the Federal Reserve’s December meeting and Trump's nomination for the next Federal Reserve Chair may influence market trends.
As 2025 draws to a close, the U.S. stock market $S&P 500 Index (.SPX.US)$ is only a step away from the 7,000-point mark.
In the final trading days of the year, investors expect that the U.S. stock market will break through this significant milestone, ending 2025 at a historic high, thus concluding a strong year on a perfect note.
The S&P 500 is just one step away from 7,000 points.
Last Wednesday, the S&P 500 closed at a record high, approximately 1% away from hitting the 7,000-point level for the first time. Following the Christmas holiday last Thursday, the index remained almost unchanged last Friday. If the S&P 500 closes higher this month, it will mark the eighth consecutive monthly gain, the longest streak since 2017-2018.
Paul Nolte, Senior Wealth Advisor and Market Strategist at Murphy & Sylvest Wealth Management, stated:
“The current momentum is certainly favorable for the bulls… Unless an external event occurs, I believe the path of least resistance for U.S. stocks is upward.”
This week, the most closely watched event in the markets could be the minutes from the Federal Reserve’s December meeting. Given the low trading volumes at year-end, any volatility in the market could amplify asset price movements.
Entering the new year, investors are highly focused on when the Federal Reserve might cut interest rates further. During the last three meetings of 2025, the Fed lowered the benchmark interest rate by 75 basis points, bringing it to the current range of 3.50%-3.75%.
However, during the Federal Reserve’s meeting on December 9-10, the latest 25-basis-point interest rate cut was met with a divided vote, and policymakers' forecasts for interest rates in the coming year varied significantly.
The minutes of this meeting are scheduled to be released at 3:00 AM Beijing time this Wednesday. These minutes may 'help clarify some of the perspectives discussed during the meeting,' said Michael Reynolds, Vice President of Investment Strategy at Glenmede. 'One major issue the market is currently focused on is how many rate cuts there will be next year. [From these minutes] we will gain more information.'
Investors are also awaiting Trump's nomination for the next Federal Reserve Chair. Any hints regarding Trump’s decision could influence the markets in the coming week.
Investors are beginning to shift from technology stocks to sectors with lower valuations.
Since the beginning of this year, the S&P 500 Index has risen by nearly 18%, while the technology-heavy $Nasdaq Composite Index (.IXIC.US)$ Nasdaq has increased by 22%.
However, the technology sector, which has been a primary driver of this over three-year bull market, has underperformed in recent weeks, while other areas of the market have shown strong performance.
Despite a rebound this week, the S&P 500 technology sector has fallen more than 3% since early November. During this period, sectors such as finance, transportation, healthcare, and small-cap stocks have experienced robust growth.
Anthony Saglimbene, Chief Market Strategist at Ameriprise Financial, believes that market movements indicate investors are beginning to shift toward areas with more moderate valuations.
“An increasing number of investors believe that the current economic foundation is quite solid... This year it has withstood many potential obstacles, and next year such challenges may no longer exist.”
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Editor/KOKO