06:05 AM EST, 12/30/2024 (MT Newswires) -- US equity investors will this week focus on factors such as the continuing debate over the incoming Trump administration's policies, the Federal Reserve's easing path, and the macroeconomic data ahead of the Q4 earnings season to determine the direction of markets hovering near record highs.

* President-elect Donald Trump's ambitions for the US are set to affect global trade, interest rates, and inflation. Investors will react as early news on the makeup of such policies emerges. Trump's return to the White House on Jan. 20 could result in hostilities, most notably, with China as the two economic superpowers negotiate tariffs, which will likely precede the implementation of potential tax cuts Trump promised during the campaign.

* Earlier this month, the Fed lowered its forecast for interest-rate cuts next year to two from four while cutting its target rate by 25 basis points to 4.25% to 4.50%. It also raised its inflation outlook for 2025. Further, the central bank upgraded its neutral rate forecast, signaling a higher-for-longer policy environment. Investors will closely watch the emerging data this week to get a sense of the strength of the US economy.

* Monday's economic data calendar includes the Chicago PMI report and pending home sales. Highlights on Tuesday include Redbook same-store sales. After the New Year's holiday on Wednesday, the schedule on Thursday includes weekly mortgage applications, weekly jobless claims, and S&P Global manufacturing. The week ends with ISM manufacturing data.

* The three major indexes are ending 2025 just short of record highs, with the Nasdaq Composite, the Dow Jones Industrial Average, and the S&P 500 up more than 31%, 14%, and 25%, respectively, and on track for the best year since 2021, according to a note from FXLeaders.

* The earnings season will begin in the second week of January, with all eyes set on the performance of the so-called Magnificent Seven, which collectively has been a major driver of gains this year.