stocks seem locked in a downward spiral  but some strategists say there is still a chance the market could temporarily steady as market pros head off for the holidays we can trust we will see downside but it might be mitigated by positive seasonal influences said katie stockton founder of fairlead strategies stocks are typically higher in december and the second half of the month is historically the best period so far this december the s  p 500 is down about 6 stocks were battered in the past week as investors reacted to a hawkish message from the federal reserve the central bank delivered an expected half percentage point rate hike but upped its forecast for future rate increases the mood darkened even more after november retail sales thursday showed a deeperthanexpected decline of 06 wheres santa i think people want to ease into the yearend and i dont think the markets going to allow that said keith lerner truist advisory services cochief investment officer and chief market strategist the market feels heavy even with this pullback some people were hoping for at least a rally into yearend and youre starting to see people giving up on that now  it doesnt mean it wont rally a little bit any type of move up will probably be more muted than was expected the calendar in the week ahead is relatively quiet with very few earnings but some interesting insight into the housing market with mondays december home builder survey tuesdays november housing starts november existing home sales wednesday and november new home sales friday nike fedex and general mills report tuesday and micron releases results wednesday there is also the important personal consumption expenditure data for november due on friday and that includes the pce deflator the feds preferred inflation measure in the past week stocks rallied tuesday after the consumer price index showed a smallerthanexpected increase of 71 for november that was below octobers 77 rate theres a lot of housing data next week said art hogan chief market strategist at b riley financial that will help us remember that the calculation of cpi and the pce are lagging indicators real data will show us housing is coming down much faster than shows up in those two reports jpmorgan estimates the november report on pce inflation next friday could show a slower rate of price increases with november data from the cpi ppi and import price index now in hand we think the core pce price index will be up 014 in november jpmorgan economists wrote this would allow the yearago rate on the core pce measure to ease from 50 in october to 46 in november market overreacted hogan expects the coming weeks data will not distress the market any more than it is already i think the sort of overreaction to the combination of the modestly more hawkish fed and the retail sales which were probably pulled forward into octoberlikely dissipates a bit next week said hogan we certainly seem to have overreacted in the near term hogan sees a chance the market will edge higher in the santa claus rally period at the end of the month he said the fact the fed raised its terminal rate or end rate to 51 in 2023 was not a surprise and the market continues to price in a rate cut by the end of next year the fed laid out its views on rates in the socalled dot plot a chart showing the anonymous forecasts of fed officials for fed funds it did not include a rate cut until 2024 the fed funds futures are reflecting a pullback of 25 basis points in the fourth quarter and the dot plot is not the dot plot has not had a great track record said hogan if thats what the market is reacting to its likely to dissipate a bit next week stockton a technical strategist said her charts had warned of a rough time for stocks her overbought signal was flashing before the selloff this week the conversations are pretty depressing these days she said noting she recommended a sell the news posture at the beginning of the week counter trend signals unfolded at the start of the week giving way to a greater loss of shortterm momentum she said there were some significant breakdowns including in apple which looks like it will continue to be a source of weakness stockton said the next support level for the stock is 127 apple is the biggest stock by market cap so it has an oversized influence on the s  p 500 and other indexes the stock slipped below 135 friday afternoon as for the broader market the s  p 500 has been trapped below 4100 and some strategists dont see it going much higher even if the market can rebound you could have these swings like we had this week said truists lerner at some point if we rebound that 4100 is a pretty tough resistance point people sold that pretty hard lerner said the he went to an underweight holding in stocks in september overweighted fixed income and has retained that positioning since were staying with health care and staples which are defensive plays we have a bar bell going where were overweight industrials and energy he said industrials are influenced by geopolitical trends and defense has been strong within the sector he said the worst performing sector in the past week was consumer discretionary down about 4 as of friday afternoon the financial and tech sectors were both down more than 3 staples took a 21 hit and health care was off 24 the only positive major industry sector was energy up 08 one of our focuses in fixed income is high quality said lerner any move closer to 4 in the 10year yield would be another buying opportunity in fixed income we think that would be a good area to invest in high quality and government bonds and extend duration bond market defiance the bond market has defied the fed this past week with rates languishing even as the fed turned up the heat with a new terminal rate above 5 bond strategists say the market is reacting to worries that the fed will tighten too much and trigger a recession while stocks are worried about higher interest rates and weaker corporate profits next year the 10year yield was at 347 friday ned davis research pointed out in a note this week that there has been a recent negative correlation between stocks and bonds meaning stocks are falling and so are yields yields move opposite to bond prices and the correlation for a long time had been falling yields meant higher stocks particularly growth and tech shares ned davis expects the negative correlation to continue for the foreseeable future and is watching the rolling oneyear correlation between the s  p 500 and the 10year treasury yield the correlation is 011 the lowest since february 2007 prior to october 2022 the correlation had not been negative since july 2007 they noted the firms equity strategists said one interpretation could be that inflation is regaining the upper hand so rising bond yields are again negative for stocks they added that since 1998 negative correlations signaled the fed had tightened too much but in the years prior to 1998 correlations were negative because inflation was seen as a bigger threat than deflation week ahead calendar monday 1000 am nahb survey tuesday earnings nike fedex general mills 830 am housing starts wednesday earnings micron riteaid 830 am q3 current account 1000 am existing homes thursday earnings carmax 830 am initial jobless claims 830 am real gdp q3 final friday 830 am november durable goods 830 am november personal incomespending 830 am personal consumption expenditures deflator 1000 am new home sales 1000 am december consumer sentiment