The US non-farm payrolls kick off the December trading curtain. Will the US stock market continue its "feast" of revelry?

According to Zhitong Finance APP, as investors hope to conclude another brilliant year for the U.S. stock market, U.S. stocks enter the last month of 2024 with performance close to historical highs.

In last week's shortened trading session, the Dow Jones Industrial Average rose by more than 2%. Meanwhile, the Nasdaq Composite Index and the S&P 500 Index both saw gains of over 1%. The S&P 500 Index and the Dow Jones Index both set historical highs at the close in November.

In the coming week, a series of key labor market data will greet investors, with the U.S. Bureau of Labor Statistics set to release the November employment report on Friday, which will be the most important data of the week. The latest data on job vacancies and private sector wage growth, as well as data on service and manufacturing activity, will also be released throughout the week.

Investors will focus on this week's economic data to understand the next interest rate moves that the Federal Reserve will announce on December 18.

In corporate news, earnings reports from Salesforce (CRM.US), Okta (OKTA.US), and Lululemon (LULU.US) will be the highlights of next week's earnings reports.

Employment Data

In recent months, market expectations for future interest rate cuts by the Federal Reserve have changed.

According to the CME FedWatch Tool, as of last Friday, the market estimated a 66% chance that the Federal Reserve would cut rates at its final annual meeting on December 18. However, looking ahead, the market expects two more rate cuts next year, with growing concerns about the Fed's progress in reducing inflation.

The labor market continues to slow, but not significantly, which may keep the Fed focused on inflation, making the case for substantial rate cuts in 2025 less compelling. The November employment report will be released on Friday, Eastern Time, which will update this narrative.

Economists expect the report to reverse the dismal employment report from October. Many believe that the October employment report was severely impacted by hurricanes and worker strikes.

The November report is expected to show that the U.S. labor market added 200,000 jobs that month, up from 12,000 in October. Meanwhile, the unemployment rate is expected to rise slightly from 4.1% to 4.2%.

The Wells Fargo economic team, led by Jay Bryson, wrote in a report to clients: "Through the monthly fluctuations in non-farm payrolls, we expect the November employment report to reaffirm that while the labor market remains solid in absolute terms, the trend of weakening employment conditions has not stopped. This message may be more clearly reflected in the unemployment rate, which we expect to rise to 4.2%."

Strong Earnings Expectations for the "Seven Giants"

Wall Street strategists are generally optimistic in their 2025 forecasts, with strategists widely believing that the S&P 500 Index's year-end target will be between 6,400 and 7,000 Among these outlooks, a frequently mentioned prediction is that the stock market's upward momentum will continue to expand, moving away from the "seven giants" tech stocks—Apple (AAPL.US), Google (GOOGL.US), Microsoft (MSFT.US), Amazon (AMZN.US), Meta (META.US), Tesla (TSLA.US), and Nvidia (NVDA.US)—and shifting towards the other 493 stocks in the index.

Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, wrote: "We believe that the market's upward momentum will continue to expand or shift towards value stocks, but this will be a closely contested opportunity." He emphasized that a strong economic growth could help support the S&P 493 index.

However, not everyone agrees. Venu Krishna, head of U.S. equity strategy at Barclays, pointed out that the earnings of large tech companies continue to exceed expectations each quarter. As long as this trend continues, Krishna believes that "large tech companies may have a significant impact on the earnings growth momentum of the S&P 500 index, just as they did this year."

In Krishna's view, although the market's upward momentum is expected to continue expanding next year, many large tech companies still have more positive earnings revisions compared to other constituents of the S&P 500 index.

Jessica Rabe, co-founder of DataTrek, noted in a research report released on November 27 that over the past 30 days, six large tech companies have revised their earnings for the current quarter either flat or higher. During this period, only Microsoft and Apple's earnings expectations were lowered by more than the S&P 500 index's expected decline of 1.2%.

Meanwhile, the earnings expectations of the ten largest non-tech companies in the S&P 500 index were, on average, revised down by 2.7%.

Rabe wrote: "The earnings expectations momentum of large U.S. tech companies is strong, and their performance far exceeds that of the overall S&P and its top ten non-tech stocks. Fortunately, large tech stocks account for one-third of the S&P index, so their fundamentals have a huge impact on the index."

Historical Trends in December

Another common view among strategists is that the strong bull market will continue until the end of the year, with more historical highs expected before trading ends in 2024.

History supports this view.

Ryan Detrick, chief market strategist at Carson Group, stated that in the market, strength often breeds strength. Going back to 1985, the S&P 500 index had risen more than 20% entering December, and in 9 out of 10 times, this benchmark index further increased. Since 2000, after such a rise in the first 11 months of the year, the index has risen every December Detrick wrote in a research report: "History shows that the stock market is very likely to rise before the end of the year."