3 Economic Events That Could Affect Your Portfolio This Week, January 1–5, 2024

Stock markets finished the final trading day of 2023 by wrapping up a robust nine-week rally as investors expect easier monetary policy in 2024.

The S&P 500 (SPX) capped an impressive 24% annual increase, adding over $8 trillion to its overall capitalization. The blue-chip Dow Jones Industrial Average (DJIA), which lagged behind other indexes for most of the year, logged a gain of almost 14% for the year. The technology benchmark Nasdaq Composite (NDAQ) registered an outstanding annual rally of 44.5%, fueled by the artificial intelligence (AI) boom and the generally strong positive sentiment towards tech stocks. The SPX and the DJIA logged their longest streak of weekly gains since 20004, while for the NDAQ it was the longest since 2019. The Nasdaq-100 (NDX) had its best year since 1999, surging almost 55%, led by the technology megacaps.

In this holiday-shortened week, investors’ attention will be split between the release of the reports reflecting trends in the U.S. labor market, alongside other economic data, and the Minutes from Federal Reserve’s last policy meeting, scheduled to be published on Wednesday. The minutes of the Federal Open Market Committee (FOMC) are usually a very important market-moving event, where investors gain insight into the Fed members’ decision-making and receive some clues about the outline of its future policy. This time, it will be scrutinized even more than usual, as market participants will be looking for confirmation of the central bank’s pivot to easing monetary policy, as well as for hints regarding the timetable of the expected interest-rate cuts.

However, with almost three months until the Fed’s March meeting, when the markets expect the first cut to be delivered, there could be many economic, geopolitical, and market events that may shatter that optimism, or alternatively strengthen it further. This is why investors are advised to closely follow economic reports that can shed some light on the central bank’s future policy changes.

Here are three economic events that could affect your portfolio this week. For a full listing of all upcoming economic events, check out the TipRanks Economic Calendar.

» December’s ISM Manufacturing PMI – Wednesday, 01/03 – This report, released by the Institute for Supply Management, shows business conditions in the U.S. manufacturing sector. It is a significant indicator of the overall economic conditions. PMIs are considered to be one of the most reliable leading indicators for assessing the state of the U.S. economy, helping analysts and economists to anticipate changing economic trends.

» December’s ISM Services PMI – Friday, 01/05 – This report, released by the Institute for Supply Management, shows business conditions in the U.S. services sector, which contributes almost 80% of the U.S. GDP. The ISM Services PMI is a forward-looking indicator, providing an important insight into the factors that influence GDP growth and inflation. PMI indices are leading economic indicators used by economists and analysts to gain timely insights into changing economic conditions since the direction and rate of change in the PMIs usually precede changes in the overall economy.

» December’s Nonfarm Payrolls and Unemployment Rate – Friday, 01/05 – The Nonfarm Payrolls and Unemployment reports, released by the U.S. Bureau of Labor Statistics, present the number of new jobs created during the previous month and the percentage of people who were actively seeking employment during the previous month. These reports are considered two of the most important economic indicators, as policymakers follow the shift in the job numbers since they are strongly associated with the health of the economy as a whole. One of the Federal Reserve mandates is full employment, and it takes labor market changes into account when determining its policy decisions, which influence the capital markets.