Investing.com — Wall Street Outlook

Wall Street is seen trading slightly lower Tuesday, the last trading day of what has been a positive year on the market. China’s manufacturing sector grew at a slower-than-expected pace in December, while Bitcoin and gold are set to close the year with hefty gains.

1. China’s Manufacturing Sector Growth

China’s manufacturing sector expanded in December but at a slower-than-expected pace, according to purchasing managers index data released on Tuesday. This marks its third consecutive month of growth, supported by fresh stimulus measures.

The Manufacturing PMI stood at 50.1 in December, just above the neutral mark of 50, but below the 50.3 recorded in the previous month. The majority of major indexes contributing to the manufacturing PMI were above the critical point, indicating rapid expansion in production activities.

China has committed to more proactive fiscal stimulus measures and moderately looser monetary policies in 2025, as indicated by the government during a Politburo meeting. Reports suggest increased fiscal spending will be aimed at supporting economic growth, particularly in response to Trump’s tariffs. Strong consumer spending is also evident in the non-manufacturing PMI, which grew to 52.2 in December.

President Xi Jinping announced that China’s GDP is expected to grow around 5% in 2024, as reported by state media.

2. Futures Edge Lower; Wall Street Gains Expected

U.S. stock futures edged slightly lower Tuesday in thin trading as markets approached the final trading session of 2024, a remarkably positive year.

By 03:45 ET (08:45 GMT), Dow futures were down 6 points (0.1%), S&P 500 futures dipped 5 points (0.1%), and Nasdaq 100 futures fell 33 points (0.2%). Overall, major averages are set to conclude the year with strong gains: S&P 500 up around 24%, Dow Jones Industrial Average up 13%, and Nasdaq up around 30%.

Market optimism this year stemmed from the Federal Reserve’s aggressive rate hikes, which fueled expectations for economic growth. The re-election of President-elect Donald Trump in November also heightened market sentiment due to anticipated deregulation and lower corporate tax rates, although concerns about future trade wars persist. The economic data slate is mostly empty on Tuesday, shifting focus to weekly unemployment and ISM manufacturing PMI data later in the week, ahead of next week’s monthly jobs report.

3. Bitcoin’s Monthly Performance

Bitcoin rose slightly Tuesday amid low year-end trading volumes but was on track for its first monthly decline since early August.

At 03:45 ET, Bitcoin increased by 0.5% to $94,297, but was set for weekly losses exceeding 4%, marking its third consecutive weekly decline, having fallen in five of the last six sessions. Despite this, Bitcoin reported an annual gain of approximately 120% after hitting a record high above $100,000 in November, buoyed by positive sentiment following Trump’s re-election.

Industry analysts predict continued positive price momentum in 2025, with expectations of Bitcoin potentially reaching $200,000.

4. Significant Gains in Gold

Gold prices edged higher Tuesday, poised for stellar yearly gains supported by the Federal Reserve’s interest rate cuts, geopolitical tensions, and strong central bank buying.

As of 03:45 ET (08:45 GMT), spot gold rose 0.4% to $2,615.85 per ounce, with February futures up 0.4% to $2,627.50. The metal has surged over 25% in 2024, influenced by earlier rate cuts from the Fed and ongoing global geopolitical tensions.

Though gold prices rose throughout much of the year, the Fed’s December meeting indicated fewer anticipated rate cuts in the upcoming year. The market now awaits economic data that may impact the Fed’s interest rate outlook for 2025 and Trump’s upcoming tariff policies.

5. Oil Prices and Chinese Manufacturing

Crude prices increased Tuesday, lifted by signs of growth in Chinese manufacturing activity, but are on pace to end lower for the second consecutive year due to demand concerns in leading consumer countries.

By 03:45 ET, U.S. crude futures (WTI) rose 0.8% to $71.53 a barrel, while Brent increased 0.7% to $74.48. China’s manufacturing sector continued to show expansion in December, supported by new stimulus measures.

The outlook for oil demand remains contingent on China’s economic recovery, the world’s largest oil importer, amid worries about potential oversupply resulting from anticipated production increases by non-OPEC countries. The Brent benchmark is projected to close with approximately a 3% loss in 2024, while WTI prices remain largely unchanged throughout the year.