The Dow Jones Industrial Average dropped about 100 points due to low trading volumes related to the holiday season. While energy stocks saw slight gains, healthcare and financial services experienced declines. Boeing’s shares rose by 1.75% after securing a government contract for F-15 jets, and UnitedHealth Group climbed 0.75%. However, Goldman Sachs fell by 1.2%, and Amgen dropped by 1%.

Federal Reserve Meeting Insights

The Federal Reserve’s latest Meeting Minutes indicated the possibility of further rate cuts, but any decisions will depend on inflation data. This shows that some FOMC members are open to lowering interest rates. US President Donald Trump has criticized outgoing Fed Chair Jerome Powell for not reducing rates more quickly. Trump appointed Powell during his first term and has expressed ongoing frustrations. The Dow Jones Industrial Average (DJIA) includes 30 major US stocks and is price-weighted. Its movement is influenced by company earnings, global economic data, and interest rates, with Dow Theory used for trend analysis. Investors can engage with the DJIA through ETFs, futures, and options contracts. With very low trading activity during the holidays, price movements may become unpredictable in the coming weeks. Trading volume is nearly 40% below the 90-day average, meaning large orders could significantly impact the market. This low liquidity suggests that new positions should be approached with caution until trading returns to normal in January.

Market Conditions and Future Outlook

The Federal Reserve is hinting at rate cuts for 2026, but these changes depend on a further drop in inflation. The latest Core PCE data for November 2025 was 2.8%, still above the desired 2% target. This uncertainty means any optimistic expectations for the market could be limited. Due to this uncertainty, the VIX index has risen to 15.5, indicating a slight increase in demand for portfolio insurance. The CBOE put/call ratio has also increased, showing that traders are buying more puts to guard against potential market dips in the new year. This cautious stance in the options market reflects underlying anxiety. Political pressures on the Federal Reserve add another layer of unpredictability for early 2026. President Trump’s renewed criticism of Fed Chair Powell could create volatility if the market feels the Fed’s independence is at risk. Traders should monitor this situation closely, as it could lead to sudden shifts in the market. The anticipated “Santa Claus Rally” typically seen in the last week of the year has not occurred strongly. This sluggish, low-volume holiday period resembles the scenario at the end of 2024. The market appears to be waiting for a new catalyst in the new year before making significant moves. Create your live VT Markets account and start trading now.

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