US stocks have been slumping headed into the first full week of 2025.
In the past five trading sessions, the S&P 500 is down more than 1.5% while the Nasdaq Composite is off nearly 2%. Meanwhile, the Dow Jones Industrial Average is lower by about 1.5%.
In the week ahead, a crucial run of labor market data is set to greet investors, with Friday morning’s December jobs report from the Bureau of Labor Statistics serving as the week’s most important release. Updates on job openings and private wage growth, as well as readings on activity in the services sectors, are also on the schedule.
The week ahead will provide a final snapshot of the labor market before the Fed’s next meeting on Jan. 30-31.
In corporate news, investors will watch for key announcements from tech companies such as Nvidia (NVDA) during the Consumer Electronics Show. Meanwhile, Delta (DAL) and Constellation Brands (STZ) are expected to report quarterly results.
The labor market cooled in 2024, but the Federal Reserve appears confident in its trajectory.
In his final press conference of the year on Dec. 18, Fed Chair Jerome Powell described the labor market overall as “good,” noting that the “downside risks” that emerged in the summer of 2024 as the unemployment rate spiked “appear to have diminished.”
“The labor market is now looser than pre-pandemic, and it’s clearly still cooling further, so far in, in a gradual and orderly way,” Powell said. “We don’t think we need further cooling in the labor market to get inflation down to 2%.”
Economists expect incoming data to show more gradual cooling. The December jobs report is expected to show the US labor market added 153,000 jobs in the month, down from the 227,000 seen in November. Meanwhile, the unemployment rate is expected to hold steady at 4.2%.
“The labor market is on solid footing, but employment growth slowed and overall labor market conditions cooled in 2024,” Morgan Stanley US economist Sam Coffin wrote in a note to clients. “The good news is the labor market is not softening as suddenly as it appeared to do last summer.”
As of Friday afternoon, markets were pricing in just an 11% chance the Fed cuts rates at its January meeting, per the CME FedWatch Tool.
The CES tech conference kicks off on Monday with a keynote speech from Nvidia CEO Jensen Huang. An analyst question and answer session is also slated for Tuesday.
Nvidia stock is down more than 1% since reporting earnings after the bell on Nov. 20 amid concerns over delays of shipments of its new Blackwell chip. Nvidia shares still ended 2024 up more than 150%.
Bank of America’s Vivek Arya told Brian Sozzi on the Opening Bid podcast Thursday that broader market forces and company-specific issues drove the sell-off in Nvidia stock late last year. “What we have seen in the market is a rotation of money from semiconductors to software,” Arya said, noting that the latter was less exposed to US trade restrictions on goods to and from China.
He added that for Nvidia, “the last two quarters have not been clean, really, because they’re going through growing pains from one generation of product that was Hopper to the new generation of product.”
The historically best seven-day stretch of the year for the S&P 500 came and went without any gains. Since 1950, the S&P 500 has risen 1.3% during the seven trading days beginning Dec. 24 amid the so-called Santa Claus rally.
But this year, the index fell about 0.5%. LPL Financial chief technical strategist Adam Turnquist wrote in a note to clients that when the S&P 500 has a negative return over this time period, it usually points to a weaker year for stocks.
Though, as we noted last week, last year didn’t feature a Santa Claus rally either, and the S&P 500 still rose roughly 24% in 2025.
“I don’t know how far the market falls from here,” Ritholtz Wealth Management chief market strategist Callie Cox told Yahoo Finance. “I certainly don’t assign too much weight to seasonal patterns. Just because the market is falling during the Santa Claus rally period doesn’t mean that we’re doomed.”
One key catalyst could come with next week’s jobs report. As a recent rise in the 10-year Treasury yield (^TNX) near 4.6% has helped contribute to the sour sentiment around stocks, Piper Sandler chief markets strategist Michael Kantrowitz believes relief could be on the way.
“We think we need to see softer employment to get rates to start coming down,” Kantrowitz said in a video to clients on Friday.
Whether the soft data comes in the week ahead or later in the first quarter, Kantrowitz believes this narrative shift from the rising rate environment could help “get equities going once again.”
Monday
Economic data: S&P Global US manufacturing PMI, December final (58.3 expected, 58.5 previously); S&P Global US composite PMI, December final (56.6 previously); Factory Orders, November (-0.3% expected, +0.2% prior); Durable Goods Orders, November final (-0.3% expected, -1.1% prior)
Earnings: No notable earnings releases.
Tuesday
Economic data: Job openings, November (7.7 million expected, 7.74 million previously); ISM Services Index, December (53.1 expected, 52.1 prior)
Earnings: Cal-Maine Foods (CALM)
Wednesday
Economic data: MBA Mortgage Applications, week ended Jan. 3; ADP Private Payrolls, December (+130,000 expected, +146,000 previously); FOMC December meeting minutes
Earnings: Albertsons (ACI), Helen of Troy (HELE), Jefferies (JEF)
Thursday
Economic data: Challenger jobs cuts, year-over-year, December (+26.8% previously); Initial jobless claims, week ending Jan. 4 (211,000 previously)
Earnings: KB Home (KBH)
Friday
Economic calendar: Nonfarm payrolls, December (+153,000 expected, +227,000 previously); Unemployment rate, December (4.2% expected, 4.3% previously); Average hourly earnings, month-over-month, December (+0.3% expected, +0.4% previously); Average hourly earnings, year-over-year, December (+4% expected, +4% previously); Average weekly hours worked, December (34.3 expected, 34.3 previously); Labor force participation rate, December (62.5% previously)
