Uncertainty on Wall Street: Critical Economic Data Expected

Growth or Disappointment Week for Investors

Wall Street investors will make critical decisions regarding how 2025 will unfold in the upcoming period. This week, American stock markets are focused on significant economic data. The delayed announcements of employment and inflation data from the previous period are at the center of attention for the markets.

Employment Data and Unemployment Rate

Experts note that if the unemployment rate rises above 4.5%, expectations for lower interest rates for 2026 could come into play. Following the recent Fed meeting where an interest rate cut was announced, investors have turned their attention to the employment report. If this report shows worse results than expected, the anticipation of interest rate cuts before the January meeting could increase.

The Impact of Long-Term Interest Rates

Although Fed decisions are decisive for short-term interest rates, long-term borrowing costs, such as 30-year mortgage rates, continue to remain high due to U.S. Treasury yields. This situation is prompting investors to be cautious. Nuveen’s Chief Strategist forecasts that the unemployment rate will decline to around 4.4%.

The Importance of Inflation Data

The Consumer Price Index (CPI) data to be released this week is expected to show a 3.1% increase year-on-year, according to a Wall Street Journal survey. However, as the Fed shifts its priority to the labor market, we observe a decrease in investor interest in inflation data.

Liquidity and Market Balancing

On Friday, one of the biggest liquidity events of the year for the S&P 500 and Nasdaq-100 indices will take place. Large investors will evaluate this liquidity event to restructure their portfolios. Warnings are issued for investors not to trade merely for the sake of trading. It is recommended that portfolios be adjusted only based on fundamental data. The data coming this weekend could increase market volatility and start to remove uncertainties created by the government shutdown in the fall.