By Martin Baccardax
U.S. stocks are on pace for another year of solid gains heading into the final weeks of 2025 but must first navigate a deluge of economic data and a still-uncertain Federal Reserve rate decision before extending the current bull market.
The S&P 500 edged into positive territory for the month last night, closing at a level that takes its year-to-date advance to around 16.2%. That's well ahead of the average gain of around 10.4% for this time of year, based on performance over the past decade, according to Ed Yardeni, president and chief investment strategist at Yardeni Research.
"The average annual increase over the past 10 years was 12.3%. If this turns out to be an average year, then the S&P 500 would fall 3.5% over the rest of 2025 to 6605," he said in a note published Wednesday. "On the other hand, it would have to gain just 2.2% to hit our 7000 target at the end of this year, which would be a 19% gain for the year."
A modest nudge higher would also deliver the first run of three consecutive 20%-plus gains for the S&P 500 since the late-1990s.
That won't be an easy feat, however, as investors face a wave of headline risks over the next 34 trading days through to the end of December tied to the likely end of the U.S. government shutdown.
"The market had been flying blind with no data and now as the fog lifts, we will see if market positioning has been correct or if there is a big repricing necessary," said Michael Landsberg, chief investment officer at Landsberg Bennett Private Wealth Management.
The Bureau of Labor Statistics, which has gone dark since the shutdown began on Oct. 1, will attempt to play catch-up over the coming weeks by collecting and releasing data on jobs and inflation that will both establish a more detailed assessment of the current economy and define the likely direction of the Fed's interest-rate policy.
The CME Group's FedWatch pegs the odds of a quarter-point rate cut at the Fed's December meeting at around 64%, with follow-on moves in January and March of next year still trading at less than 50%.
The BLS could publish at least three employment reports, as well as two consumer price index updates, prior to the Dec. 10 rate decision. The last CPI reading put the annual headline rate at 3%, a touch lighter than Wall Street's 3.1% forecast but still well north of the Fed's 2% target.
Weekly jobless claims updates, as well as the monthly JOLTs reports on labor market turnover, also haven't been published since late September.
The Bureau of Economic Analysis is also deeply in arrears in terms of data release, having last published its PCE inflation report for the month of August on Sept. 26. The Fed relies heavily on BEA updates to both form its policy decisions and model its near-term outlook for growth, inflation, and unemployment, which it will publish alongside its rate decision next month.
Lawmakers are set to vote today on a funding bill that would end the federal government's 43-day shutdown, the longest on record. Analysts see it passing the Republican-controlled House and moving toward President Donald Trump's desk for a final signature before the end of the week.
Stocks typically post solid gains in the wake of a government reopening, with an average return of around 12.7% over the following 12 months, according to data from Carson Group's chief market strategist Ryan Detrick.
His focus on a year-end rally, however, remains fixed on the impressive earnings growth recorded over the third-quarter reporting season, which is likely to see collective S&P 500 profits rise more than 16% from last year to $612 billion. That's a $42 billion improvement from earlier forecasts.
"While investors are worried about many things, we like to spend most of our time focusing on earnings," Carson said. "Earnings tend to drive long-term stock returns and we've seen a spectacular earnings season, again justifying the fundamentals of this bull market."
Write to Martin Baccardax at martin.baccardax@barrons.com
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(END) Dow Jones Newswires
November 12, 2025 07:38 ET (12:38 GMT)
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