The Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) stand at their highest levels in the last four months, supported by hopes that Federal Reserve would get less aggressive with U.S. interest rate hikes.

Nasdaq Composite (COMP) lost -0.2% last trading week, but even with this loss, Nasdaq is up more than 600 points from November 09.

Inflation has begun giving signals of easing in the United States, and because of this, investors are more optimistic, meaning smaller rate hikes could be enough to fight inflation.

There is a big chance that Fed policymakers could decide to raise rates by 50 basis points when they meet in December instead of 75 basis points.

The federal funds rate is now in a range of 3.75% to 4%, which is the highest level since January 2008. Ellen Zentner, an analyst from Morgan Stanley, said:

Since the November FOMC meeting, the Consumer Price Index has surprised to the downside, and the Fed could revise lower its inflation path, or at the very least see that upside risks to inflation no longer remain.

In the days ahead, the U.S. stock market is going to be hypersensitive to any sort of FED comments, and investors will continue to watch carefully every piece of data that could influence the Federal Reserve decision.

Next week, the United States will publish the second estimate of the Q3 Gross Domestic Product (GDP), the core Personal Consumption Expenditures Price Index for October, and the November ISM Manufacturing PMI.

Finally, on Friday, the United States will release monthly employment figures for November. The job report is expected to show that the country has lost 30,000 job positions in November, while the unemployment rate is foreseen at 3.6%, easing from the previous 3.7%.

The bottom line here is that the labor market is softening, which is also one of the reasons why the Federal Reserve could hint at slowing the pace of rate increases.

If Fed slows the pace of interest rate increases, Wall Street’s three main indexes could advance above the current levels; still, investors should keep in mind that the U.S. economy did not still escape a recession that could dent corporate earnings and, therefore, share prices.

S&P 500 again above 4,000 points

For the week, S&P 500 (SPX) booked a 1.5% increase and closed at 4,026 points. The price has also moved above the 10-day moving average, which is certainly a positive sign.

Data source: tradingview.com

If the price jumps above the current resistance level, which stands at 4,200 points, it could reach 4,400 points very soon.

On the other side, if the price falls below 3,800 points, it would be a “sell” signal, and we have the open way to 3,600 points.

DJIA up  2.2% on a weekly basis

The Dow Jones Industrial Average (DJIA) advanced 2.2% for the week and closed at 34,347 points.

Data source: tradingview.com

The price continues to move above the 10-day moving average, which is certainly a positive sign, and if it jumps above 34,500 points, the next target could be around 35,000 points.

The current support level stands at 33,000 points, and if the price falls below this level, the next target could be 32,000 points.

Nasdaq Composite down -0.2% on a weekly basis

Nasdaq Composite (COMP) lost -0.2% last trading week and closed at 11,226 points.

Data source: tradingview.com

The current support level for Nasdaq Composite stands at 11,000 points, and if the price falls below this level, the next target could be 10,500 points.

Summary

The United States will release monthly employment figures for November this Friday, and the job report is expected to show that the country has lost 30,000 job positions in November. The labor market is softening, which is also one of the reasons why the Federal Reserve could hint at slowing the pace of rate increases.

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