Image Source: Pexels

The prospects for at least one rate cut in 2025 dimmed thanks to a 'surprising' jobs report. The S&P 500 (Index: SPX) declined 1.9% from the previous Friday's close to end the trading week ending on Friday, 10 January 2025 at 5,827.04.

The jobs report is more surprising than has been reported, which we'll discuss in a separate analysis in the very near future. As a preview, much of the reported net increase in new jobs is unusually concentrated within a particular and very narrow demographic.

With the surprisingly strong December 2024 employment situation report, investors reacted by pushing the expected timing of the Fed's lone expected rate cut for 2025. The CME Group's FedWatch Tool indicates the timing single rate cut it was expecting in 2025 changed from 7 May to 18 June (2025-Q2).

That kept the forward-looking focus of investors on the second quarter of 2025. In the latest update to the alternative futures chart, which we've rolled forward to reveal the potential trajectories the S& 500 is likely to take during 2025-Q1, we find the trajectory of the index falls within the lower range the dividend futures-based model projects will hold when investors are focused on 2025-Q2.

(Click on image to enlarge)

The Atlanta Fed's GDPNow tool's projection of the real GDP growth rate for the current quarter of 2024-Q4 rose to +2.7% from the previous week's +2.4% annualized growth estimate.

Image credit: Microsoft Copilot Designer. Prompt: "An editorial cartoon showing a smiling bear taking a box away from a sad Wall Street Bull. The box has the words 'Future Rate Cuts' written on it".

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