Wall Street is set to trade slightly higher on Monday, but movements are expected to remain constrained ahead of the Federal Reserve’s final meeting of the year. Meanwhile, weak Chinese economic data continues to weigh on sentiment, and Bitcoin has surged to a new record high amid speculation of a strategic reserve.
1. Fed to Cut, But Adopts a More Cautious Tone
The focus this week will be on the Federal Reserve’s final meeting of the year, scheduled for Wednesday. The central bank is widely expected to implement another 25-basis-point rate cut, marking its third consecutive reduction.
With this cut already fully priced in, investor attention is shifting toward the Fed’s forward guidance, particularly on how much further rates could be reduced in 2025.
The Fed will release an updated summary of economic projections during the meeting, offering insight into policymakers’ outlook for future rate adjustments. The previous summary indicated the potential for four rate cuts in 2025, but a slower pace may now be signaled.
Goldman Sachs analysts predict the Fed will take a more cautious approach, potentially holding rates steady in January, contrary to earlier expectations of another cut.
“One reason for this is that unemployment has come in lower and inflation higher than the Federal Open Market Committee’s (FOMC) projections, though neither deviation is as significant as it may seem,” Goldman Sachs noted in a report.
The analysts added that the Fed could also tread carefully in light of new policies under the Trump administration, particularly given the impact of additional trade tariffs.Goldman Sachs expects the Federal Reserve to cut rates by 25 basis points each in March, June, and September 2025. However, the terminal rate for the current easing cycle is now projected slightly higher, between 3.5% and 3.75%.
2. Futures Edge Higher; Spotlight on MicroStrategy
U.S. stock futures ticked up slightly on Monday, kicking off the week with caution ahead of the Fed’s final meeting of the year.
As of 04:00 ET (09:00 GMT), Dow futures were flat, S&P 500 futures rose by 2 points, or 0.1%, and Nasdaq 100 futures added 17 points, or 0.1%.
Wall Street’s major indices are coming off a subdued week, with the Dow Jones Industrial Average falling nearly 2%, marking its seventh consecutive decline and the longest losing streak since April.
This week, investor attention remains firmly on the Federal Reserve, which is widely expected to announce another rate cut as the year concludes.
In economic releases, preliminary purchasing managers’ index (PMI) data is scheduled before the market opens. On the corporate front, MicroStrategy (NASDAQ:MSTR) is set to garner attention after being named a new addition to the Nasdaq 100 index.
3. Uneven Chinese Recovery Raises Hopes for More Stimulus
Weekend economic data highlighted the patchy recovery in China, suggesting further stimulus measures may be on the horizon.
According to Monday’s figures, Chinese industrial production grew as expected in November, buoyed by Beijing’s recent stimulus initiatives to support business activity. However, other indicators underscored the uneven nature of the recovery, keeping market participants focused on potential additional measures from Chinese policymakers.However, retail sales missed expectations, highlighting persistent weakness in consumer spending, while house prices continued to decline.
The mixed economic data underscores the challenges facing China’s leaders in achieving a sustainable recovery as they head into 2025. Domestic consumption remains subdued, and the prospect of additional U.S. trade tariffs under a second Trump administration adds further uncertainty.
While expectations for more stimulus are high, any additional measures will likely need to focus on boosting consumer spending to have a meaningful impact.
Despite these challenges, Moody’s (NYSE:MCO) raised its 2025 GDP growth forecast for China to 4.2% from 4.0% in a report on Monday. The ratings agency cited stabilizing credit conditions and the effects of Beijing’s recent stimulus measures since September as mitigating factors against the potential impact of higher U.S. tariffs.
4. Bitcoin Hits New Record High
Bitcoin surged to a fresh record high on Monday, buoyed by remarks from President-elect Donald Trump last week about potentially creating a strategic reserve for the cryptocurrency, akin to the country’s Strategic Petroleum Reserve.
As of 04:00 ET (09:00 GMT), Bitcoin rose by nearly 2.5% to $104,410, after earlier reaching a record high of $106,569.4.
In an interview with CNBC, Trump outlined plans to build a crypto reserve as part of his strategy to position the U.S. as a global leader in the cryptocurrency space.
Sentiment was further lifted by the announcement that MicroStrategy Incorporated, the largest corporate holder of Bitcoin, will join the Nasdaq 100 index—a move expected to attract more capital into the cryptocurrency market.Bitcoin, the world’s leading cryptocurrency, has soared over 50% since the November 5 election that brought Donald Trump to victory, pushing its market capitalization to $2.11 trillion, according to CoinMarketCap.
A further 14% increase in Bitcoin’s price could elevate it to the 6th largest asset globally by market capitalization, surpassing Google’s $2.3 trillion valuation. This would firmly establish Bitcoin as one of the most valuable financial assets worldwide.
5. Oil Pulls Back Ahead of Fed Meeting
Oil prices declined on Monday, reversing some of last week’s gains amid disappointing Chinese economic data and caution ahead of the Federal Reserve’s policy meeting.
By 04:00 ET, U.S. West Texas Intermediate (WTI) crude futures fell 1.5% to $70.28 per barrel, while Brent crude dropped 0.7% to $74.00 per barrel.
Both benchmarks posted strong gains last week, supported by the introduction of new European Union sanctions on Russian oil and the prospect of tighter restrictions on Iranian supplies.
However, concerns about weak demand, particularly from China—the world’s largest crude importer—have tempered the rally. The International Energy Agency (IEA) recently highlighted China’s contracting oil demand, fueling fears of an oversupply in 2025.
Market sentiment also remains cautious ahead of the Federal Reserve’s meeting this week. While the central bank is widely expected to cut interest rates by 25 basis points, it is also likely to signal a slower pace of rate cuts in 2025.
