The 6 Biggest Economic Events To Watch In December

After giving up all of its year-to-date gains and entering a correction for the second time in 2018 (the first drop being February’s dramatic correction), S&P 500 futures traders are trying to make up any lost ground that they can in the final few weeks of 2018. The broad market index is set to enter the final month of the year up only about 2 percent from where it started in January, its lowest gains in that span since 2015.

A similar race to recapture some of its summer highs is playing out on the tech-heavy Nasdaq futures, which suffered more dramatic falls (-12 percent at its lowest point), but has still managed to build up from the ashes to about 16 percent above its 2018 entry heading into December, on par with its previous annual gains.

Given the enthusiasm that gripped the market through most of 2018, traders remain hopeful that, despite the headwinds facing the market in the form of an ongoing trade war, rising interest rates and lower growth projections for 2019, the major indexes will still experience a “Santa Claus Rally,” a year-end jump in broad indexes (averaging between 1-2 percent) that generally comes between Thanksgiving and Christmas.

However, whether that rally comes, and which indexes might benefit will depend on a lot of factors and potential catalysts. Derivative traders and pure equity investors would do well to keep their eyes fixed on the stock futures markets during key dates for hints of buying or selling pressure in the run-up to some impactful economic events.

G-20 Summit | November 30-December 1 - Any sign of progress on the U.S.-China trade war would be cause for celebration in the market. Conversely, if none materialize, the market will want to see if President Trump increases pressure from the U.S. side. If that ends up being the case, we can all likely kiss that Santa Claus rally goodbye.

November’s Employment Situation Summary | December 7 @ 8:30 a.m. - Historically the most closely watched economic data point, the jobs number will typically cause immediate volatility in the S&P futures and traders will be closely watching how November’s reading compares to estimates. Nonfarm Payrolls for October came in at 250,000, and the unemployment rate held steady at 3.7 percent.

CPI | December 12 @ 8:30 a.m. - The market’s biggest inflationary indicator has been pretty mild for the most part in 2018. However, with an incoming Fed decision, traders could be extra sensitive to any deviation from last month’s readings of 0.3 percent inflation month-over-month and 2.5 percent inflation year-over-year.

Retail sales | December 14  @ 8:30 a.m. - A telling signal for just how much funny money the average American has, November’s retail sales reading is arguably the most critical of any month because of its inclusion of the beginning of holiday shopping. Retail sales increased 0.8 percent month-over-month in October.

Federal Open Market Committee Decision | December 19 @ 2 p.m. - Without a doubt the biggest event in the lead up to Christmas, this rate decision—which has an 82.7 percent chance of ending in a 0.25 percent hike—could be priced in after Jerome Powell’s Wednesday comments. However, expect some volatility in the S&P futures even if that expectation is met.

Quad Witch | December 21 - Occurring on the third Friday at the end of every quarter, quad witching days are when stock index futures, stock options futures, stock option, and single index futures contracts all reach their expiration. While not a news-related event per se, a quad-witch generally adds a good deal of volatility to equity markets.