Trade relations between China and the U.S. overshadow most everything as stocks enter the month of December, but in the week ahead the Fed and U.S. economy come back into play with important Fed testimony and the November employment report.
Fed Chairman Jerome Powell, whokicked off a powerful rally with his comments Wednesday, appears before the Joint Economic Committee of Congress this coming Wednesday to speak on the economy. Powell said the Fed was close to the neutral rate, the level on the benchmark fed funds rate that is neither stimulative nor slowing for the economy.
That comment sparked a rally of more than 600 points in the Dow and, in the market's view, reversed a previous comment from Powell that neutral was far off, meaning the Fed would have to keep hiking interest rates aggressively. The market is now pricing in one hike for December and just one for all of 2019.