The record-busting rally in the U.S. stock market has taken a pause. After major benchmarks set several all-time highs in December, the S&P 500 fell nearly 2% in three days before recovering to end the week higher.
Experts say trade remains "the biggest risk out there" for the stock market right now, and that's likely to create some choppiness in the weeks ahead. That's because there's a December 15 deadline looming for China and the U.S. to reach a trade deal before additional U.S. tariffs on Chinese goods take effect.
The coming week is likely to be busy. House Speaker Nancy Pelosi on Thursday directed the House committees investigating President Donald Trump to proceed with articles of impeachment, and the Judiciary committee is scheduled to hold a hearing Monday morning on the evidence gathered in the inquiry. The Federal Reserve also will meet for its eighth and final time this year on Tuesday and Wednesday. While surprises on either front could rattle traders, pros point out that even big news can be "a nonissue for the market."
Wall Street will be monitoring the all-important retail sales report due on Friday, especially as the holidays draw near. And a monthly survey of small business owners is scheduled for release on Tuesday.
Here's what to watch in the stock market during the week ahead — and how the news could affect your bottom line.
What's happening: The monthly retail sales report for November is scheduled for release on Friday, December 13. This details how much American consumers spent on things like clothing and food.
Economists currently forecast the biggest month-over-month increase in spending since August. Last month's report showed that retail sales rebounded after falling in September, though Americans cut back on buying big-ticket household items. Meanwhile, economists project that another report due Wednesday will show that average hourly earnings ticked up slightly in November.
Why it matters: American consumers have been very resilient this year, even amid signs of slowing in the broader economy. Reports in the past week showed that sentiment improved to the second-best number 2019 and consumers are borrowing more money via revolving credit, like credit cards, at rates not seen since July.
Traders on Wall Street track the monthly retail sales report closely because consumer spending accounts for more than two-thirds of U.S. economic growth.
What it means for you: Perhaps you haven't made any changes to your shopping habits, but what your neighbors do matters to the overall economy. What's more, there are less than three weeks until Christmas and the start of Hanukkah — and spending during the all-important holiday shopping season accounts for about 20% of annual retail sales each year, according to the National Retail Federation.
What's happening: A monthly report that measures confidence among small business owners is scheduled for release on Tuesday by the National Federation of Independent Business. This survey looks at 10 different components, like whether business owners plan to hire more workers or spend more money, and how they feel about the economy.
Why it matters: Businesses with fewer than 500 workers account for almost half of private sector employment, so traders closely monitor how these business owners feel. A separate poll last week found that optimism about the future of U.S. trade policy helped lift confidence among small business owners, according to the fourth-quarter 2019 CNBC/SurveyMonkey Small Business Survey.
Trade has been key to the rebound in sentiment among business owners, so there's also a risk if China and the U.S. can't reach a deal before additional tariffs take effect. That means traders will be keen to see if there are any clues about future readings, especially because sentiment this year has been lower, on average, than either 2017 or 2018.
What it means for you: Even if you don't work for a small business, chances are you know someone who does. Hiring plans are good to track because they reveal important clues about the overall health of the U.S. economy. If employers pull back on adding workers to their payrolls, that may make it more difficult for job seekers to find a new position. Last month's broader jobs report showed that employers added 266,000 jobs, the most since January.
Even with the bumpiness in the stock market so far in December, the S&P 500 still is up more than 25% and it's poised to end one of its best decades ever with a bang.
If you'd invested $500 in a fund tracking this index 10 years ago, that would be worth more than $1,850 today.
That said, experts do anticipate some bumpiness ahead, particularly related to the next steps with a potential U.S.-China trade deal. And the 2020 election, which is less than a year away, could also cause some uncertainty.
Any turbulence in the market can be a good opportunity for long-term investors to buy stocks at lower prices. And no matter what happens in any given week, it's important to keep perspective and remain consistent with your investment strategy.
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