Week Ahead: Can S&P 500 close out 2021 with new record high?
The S&P 500 posted its highest-ever closing price on Thursday amid upbeat US economic data. Such a feat by this blue-chip stock index was perhaps unimaginable a few weeks ago amid fears over the Omicron variant and the prospects of more Fed rate hikes in 2022.
Question now is whether the benchmark for US stocks can climb onto greater heights during the final calendar week of the year that’ll likely be marked by thinned-out trading and scarce economic events:
Monday, December 27
- Australian, UK markets closed
- CNY: China November industrial profits
- USD: US December manufacturing activity
Tuesday, December 28
- Crude: Weekly API report on US crude oil inventories, supply and demand
- JPY: Japan November unemployment, industrial production
Wednesday, December 29
- USD: US November wholesale inventories
- US crude: EIA weekly US crude oil inventory report
Thursday, December 30
- EUR: ECB economic bulletin
- USD: US initial weekly jobless claims
Friday, December 31
- CNY: China December manufacturing and non-manufacturing PMIs
Overall, Omicron’s eventual impact on the global economy is still uncertain, even though investors are pinning their hopes that this latest variant of concern would be less severe than its predecessors. There also remains the risk of lockdowns being reimposed in major economies after the holidays, which could hurt cyclical stocks.
Hence, developments surrounding Omicron's spread could lead to more volatility in equity markets, exacerbating already thin trading in the few remaining trading sessions of the year.
Market participants have also been cognizant of the threat of the Fed adopting sterner policies in the new year to rein in US inflation. Risk assets tend to dislike higher interest rates, hence such concerns may cap the upside for the S&P 500.
Even with such woes in play, stock bulls have shown remarkable resilience in overcoming walls of worries and pushing stocks to loftier peaks. And thus it remains to be seen where the S&P 500 will end up as we bring the curtains down on 2021.