With the market's tumultuous 2022 drawing to a close, December is the last stepping stone to go. The month is traditionally a strong one for the market, with the force of holiday spending driving returns.

But this hasn't been an average year, and the market is down by almost 16%. Will December herald another chapter of gloom in the bear market, or will the Santa Claus rally give way to a blistering start to 2023? In my view, a scenario that's somewhere in the middle of those two is the most likely. Here are three predictions that indicate why -- and what to do about them. 

My biggest prediction for December is that the Federal Reserve will continue to be the single largest influencer of the market as a result of its ongoing mission to stem inflation by increasing the Federal Funds rate. Raising the Federal Funds rate increases the cost of borrowing money, which in turn influences the amount of liquidity in the economy, not to mention stock prices. So far, the trend has been for stocks, especially risky growth stocks, to fall when rates rise, as growth-phase companies are the ones most likely to need to take out debt to finance their expansions.

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Source Fool.com