Powell News Kicks Off Volatile Season?

November 29, 2021

The holiday season is often a quiet, positive time for the financial markets. The phrase “Santa Claus Rally” was coined in the early 1970s to reflect the stock market’s upward bias during the November-January stretch.1

But this year, the markets might face some crosswinds as we travel through the holidays.

The stock market initially reacted well to news that President Biden will nominate Jerome Powell to lead the Federal Reserve for a second term. But trading became choppy as the session continued.2

Next up, the markets may react to an active December legislative calendar. Between today and New Year, Congress is preparing to work on the federal budget, the debt ceiling, and the Build Back Better plan.

Economic news also may influence trading in the weeks ahead. For example, the next reading on inflation (Consumer Price Index) releases on Friday, December 10.3

Last, COVID-19 continues to be unpredictable. Many states have seen an uptick in infections in recent weeks, and a few nations have adopted more aggressive lockdowns to help manage the most recent wave.4

Markets tend to be comfortable with some uncertainty, believing that time will resolve the issues. But this year, it might be best to prepare for Santa’s sleigh to hit a few speed bumps along the way.

1. CNBC.com, November 22, 2021

2. CMEGroup.com, 2021

3. BLS.gov, November 10, 2021

4. APNews.com, November 20, 2021