The S&P 500 (Index: SPX) touched a new record high during the Martin Luthor King Jr. holiday-shortened trading week.

It hit that high on Thursday, 23 January 2025 as it closed at 6,118.71, before reteating to end the week at 6,101.24. The index was up 1.74% over its previous week's close.

The driving factor behind that change is increasing expectations of a second rate cut later in 2025. The CME Group's FedWatch Tool gives a greater than 75% probability the Fed will act to cut interest rates by a quarter point on 18 June (2025-Q2), but more significantly, it now indicates a greater than 50% probability of another quarter point rate cut on 10 December (2025-Q4).

The latest update of the alternative futures chart the trajectory of the S&P 500 is now consistent with investors focusing their forward-looking attention on that distant future quarter.

Unlike most holiday-shortened weeks, the trading week ending Friday, 24 January 2025 was packed with market-moving headlines.

Tuesday, 21 January 2025

• Signs and portents for the U.S. economy:
• Oil falls as Trump's plan to boost US oil output takes shape
• No day-one tariffs from Trump, but he says Canada, Mexico may get duties Feb 1
• Fed minions drops Biden-driven green initiative, are expected by one investment house to deliver more than one rate cut in 2025:
• Central banks' green push hits a hurdle as Fed drops out
• Guggenheim expects Fed to cut rates about every quarter in 2025
• Bigger trouble, stimulus developing in China:
• ‘We’ve impeded China’: departing official defends US export controls
• China's frugal young adults accelerate saving, raising economic risks
• China enters 'new normal' for luxury market with flat sales expected in 2025, report says
• China leaves benchmark lending rates unchanged
• China's crude oil imports from top supplier Russia reach new high in 2024
• BOJ minions gearing up to hike Japan's interest rates:
• Bank of Japan poised to raise rates to highest in 17 years
• ECB minions expected to deliver more interest rate cuts in Eurozone:
• Easing tariff fears cement bets on ECB rate cut next week
• Dow ends up 1%, S&P, Nasdaq rise on liftoff of Trump 2.0 trading era
• Wall St edges higher with focus on President Trump's trade policy
• Apple slump steers Nvidia to reclaim spot as most-valuable company

Wednesday, 22 January 2025

• Signs and portents for the U.S. economy:
• Oil eases to one-week low amid Trump tariff uncertainty
• BOJ minions see wage inflation in Japan:
• Japan wage growth gathers steam as reluctant retailers raise pay
• S&P just misses out on record close, Nasdaq ends +1% on Netflix, AI trade boost
• Netflix shares hit record as subscriber growth defies odds once again

Thursday, 23 January 2025

• Signs and portents for the U.S. economy:
• Oil falls as Trump urges OPEC to lower prices
• Oil prices held down by Trump tariff uncertainty
• Trump tells Davos he will demand lower interest rates, oil prices
• Trump to global firms: Manufacture in USA or face tariffs
• Fed minions get encouragement for rate cuts from Trump administration
• Trump targets Fed and calls for lower interest rates
• China's government starts shaking out couch cushions to develop bigger stimulus:
• China prods insurers to invest billions in latest move to support markets
• BOJ minions get better economic news, think they need to start getting ahead of rising inflation in Japan with rate hikes:
• Japan December export growth beats forecast amid tariff jitters
• Japan exports rise 2.8% in Dec, beat forecasts
• BOJ likely to raise rates to highest in 17 years, signal more hikes
• ECB minions expected to deliver another interest rate cut for the Eurozone, aren't worried about inflation:
• ECB policymakers line up behind rate cuts
• ECB's Villeroy: Trump policies unlikely to have much impact on euro inflation
• S&P ends at record high, Dow up as Trump pushes for lower oil, rates
• S&P 500 notches closing record with focus on Trump comments, earnings

Friday, 24 January 2025

• Signs and portents for the U.S. economy:
• Oil prices set for weekly drop as Trump touts energy policy, threatens tariffs
• Trump once again calls for OPEC to drop oil prices
• US oil and gas rig count falls to lowest since Dec 2021, Baker Hughes says
• US existing home sales rise in December; house prices hit record high in 2024
• Fed minions expected to hold Federal Funds Rate steady this month:
• Fed to hold rates steady at an unsteady moment
• A Fed on hold, for now, eyes strong jobs, easing inflation
• Growth signs developing in China as stimulus gets results:
• China stimulus scheme lifted 2024 consumption growth by 1 pct point
• POLL China Jan manufacturing activity seen expanding for fourth month
• Dividend surge signals culture shift in China's markets
• BOJ minions raise Japan's base interest rate to 0.5% to combat Japan's rising inflation:
• Bank of Japan raises rates to highest level in 17 years
• Japan hikes rates to highest since 2008 as sustained inflation, rising wages signal ‘virtuous cycle’ in play
• Japan's core inflation hits 16-month high, markets brace for BOJ hike
• Japan factory activity sinks to lowest level in 10 months, PMI shows
• Germany pauses dragging Eurozone economy down:
• Euro zone businesses start year with modest return to growth, PMI shows
• German business activity stabilises in January, PMI shows
• S&P ends below record high; stocks score winning week before Fed's first 2025 meeting
• Wall St slips with mixed data and earnings ahead of Fed week

The Atlanta Fed's GDPNow tool's final projection of real GDP growth rate for the now-past quarter of 2024-Q4 is unchanged from the previous week's +3.0% annualized growth estimate. With the BEA's upcoming first estimate of GDP in 2024-Q4 release on 30 January 2024, the GDPNow tool's next forecast will be for real GDP in the first quarter of 2025.

Image credit: Stable Diffusion Dreamstudio Beta. Prompt: "An editorial cartoon of a blindfolded Federal Reserve official who is throwing darts at calendars. One dart is sticking out of the calendar that says 'DEC-2025'."