The shortened trading week, and traditionally low volume levels around the Christmas holiday, will likely accentuate any market shifts related to developments in the stalled U.S. federal budget talks. Congress will reconvene on Thursday.
But before then, trading will likely remain calm in the shortened session leading up to Christmas Eve.
The Toronto Stock Exchange closes early on Monday at 1:30 p.m. ET, while New York markets end the session at 1 p.m. ET.
North American markets will remain closed for the Christmas Day holiday, and the TSX will also be closed on Wednesday for Boxing Day.
On Thursday, traders will return their attention to the ticking clock leading up to the year-end deadline.
Last Friday, stocks fell sharply after House Republicans called off a vote on tax rates and left federal budget talks in disarray 10 days before sweeping tax increases and government spending cuts are scheduled to take effect.
President Barack Obama said later Friday that he is "ready and willing" to get a big package done to deal with the fiscal cliff, adding there's no reason not to protect middle-class Americans from tax increases.
Obama says he spoke Friday with House Speaker John Boehner and met with Senate Majority Leader Harry Reid. He says Congress should pass a plan to extend tax breaks for the middle class and extend unemployment benefits.
Obama says no one can get 100 per cent of what they want and there are "real consequences" to how they deal with the across-the-board tax increases and steep spending cuts scheduled to kick in Jan. 1. Economists fear the combination could deliver a blow to the U.S. economy.
A deal must be reached to avoid going over the so-called fiscal cliff,' which would involve the automatic imposition of hundreds of billions of dollars in spending cuts and tax increases that could plunge the world's largest economy back into recession and depress economies around the world.
"Legislators are under increasing pressure to act quickly to prevent the sort of acute market volatility seen before (the) agreement on TARP and a debt ceiling deal 16 months ago," said CIBC World Markets senior economist Peter Buchanan.
Investors will also be squaring away their tax books for the year. Monday marks the last day for tax-loss selling for Canadian taxpayers selling equities through domestic accounts. The deadline for U.S. securities tax loss sales is Wednesday.
"Once you get past those tax-loss selling deadlines, the markets have to look ahead, because there's nothing else you can lock in for 2012," said Gareth Watson, vice-president of investment management and research at Richardson GMP Ltd.
"Once we get to Thursday and Friday people will start focusing way more on 2013. That's probably when the Washington news and noise will have even greater influence and that's probably where the volatility picks up again."
In the U.S., pending home sales figures are due on Thursday with expectations for home prices to show further appreciation.