Hello, I'm Eric Criscuolo, Market Strategist at the New York Stock Exchange, and this is Market Storylines. Every week, we’re here to keep you up to date on the key trends and events driving global markets. We’re recording this on Thursday, December 4, a few hours before the 102nd Annual NYSE Tree Lighting. I’m proud to say the tree comes from historic Peekskill, NY. 5 minutes from my house.

This video will probably come out after the tree is lit, but I still want to invite everyone to come down to the corner of Wall and Broad Street and check it out. You can take a ferry ride to Staten Island while you’re here, fulfilling all your Christmas wishes.

With that, let’s dive into this week’s Market Storylines. We’re back to a full work week following a very holiday-shortened one last week, when markets closed on Thursday for Thanksgiving and wrapped up early on Friday. The most important market event was the incredible Connect 4 tournament on Friday, held in front of the NYSE MAC Desk on the trading floor during Kids Day. America’s future looks bright based on what we saw from those kids, and I’m relieved I aged out of the brackets.

Besides Connect Four, technical milestones were a key theme last week. The S&P 500 finished up 4% as the 100 day moving average held as support. That allowed the index to regain its footing, reclaim the 50 day average and get back above 6800. Mid and small caps outperformed, adding 4-6%, and crypto bounced back after a rough sell-off.

This week is kind of a weird one, sandwiched between the short Thanksgiving week and next week’s Fed rate decision. We’re seeing some consolidation of last week’s gains. Since reclaiming the 6800 level last Wednesday, the S&P has traded in a pretty tight range of about 6800 to 6870 over the past five days, with the all-time high less than 1% above us. That’s coincided with a strong compression in volatility. The VIX has declined from around 26 on November 20, to 16 currently, a very mild level.

While equity volatility has fallen off, crypto has seen some big moves. After recovering from a low of around 80,000 hit several days ago, Bitcoin started this week by getting smashed on Monday, only to completely reverse that move the next day. It’s testing resistance around its 20 day moving average of about 93,000.

Both the S&P 500 and the equal-weight index are around unchanged for the week, as well as for today. If we close positive, it would be the 8th day in the last 9 for the S&P.

It’s the small caps though that have taken the spotlight. After starting the week under pressure, they’ve seen a solid bid come in the past two days and are now outperforming for the week. Narrative-driven and thematic baskets are seeing strong gains, like the quantum computer group we reference a lot. At least some of this is due to residual impact from recent executive orders like the Genesis Mission, and related news that the administration has a lot more to announce around robotics and AI in the near future.

Small caps have gained despite treasury yields moving higher, in line with global yields. Hawkish commentary from the Bank of Japan sent sovereign yields higher to start the week, creating a headwind for equities. Global yield curves steepened with 10 and 30 years rising over 10 basis points in some regions. With yields in Japan rising, the yen strengthened against the Dollar, and the US Dollar index has fallen from above 100 two weeks ago to below 99 currently. Doesn’t sound like much but in currency markets it’s a notable move.

Let’s close out with a look to next week. The main event will be the Fed’s interest rate decision and Chair Powell’s press conference on Wednesday. An update of the FOMC’s Summary of Economic Projections, or SEP, which includes the famous Dot Plot will be included. Markets have priced in about a 90% chance of a 25bp rate cut. Assuming Powell doesn’t shock markets, the focus shifts to whether the forward guidance on further rate cuts will turn in a more hawkish manner and lower expectations for future cuts. Relatedly, the CPI report for November will be released on Dec. 18, so after the FOMC meeting.

We’ll get some belated employment data. The JOLTS reports for September and October will be published as the government catches up from the shutdown. Weekly jobless claims will come out as usual. There will be a 10y treasury auction to keep an eye on too, especially given this week’s moves in yields. As far as earnings, more retail and consumer-focused names will report, including Autozone, Toll Brothers, GameStop and Costco. Oracle’s earnings will also be a key event given the ramping scrutiny of AI spend, and Broadcom will also be a focus.

President Trump said he would announce his pick to succeed Powell as Fed Chair early next year, but, I mean, you never know. Hassett is the big favorite. Speaking of Trump, a decision on the SCOTUS tariff case is expected at some point, but more likely closer to year-end if anything.

That’s wrap on this week. You can take a break from the holiday madness and watch Market Storylines on TV.NYSE.com or on the NYSE YouTube Channel. You can also listen every Friday on the Inside the ICE House Podcast feed. Thanks for joining me. I’m Eric Criscuolo. Now let’s go light this tree.