Equities turned higher mid-week. The Dow Jones Industrial Average rose 0.48 percent on the week, the Nasdaq climbed 0.14 percent. The small-cap Russell 2000 slipped 1.05 percent.
SPDR Financials (XLF) rose 1.56 percent to lead the major sectors. SPDR Industrials (XLI) followed with a gain of 1.49 percent. SPDR Utilities (XLU) slid 0.96 percent, iShares U.S. Telecommunications (IYZ) 4.01 percent.
Weekly jobless claims fell to 236,000 beating expectations by 4,000. 228,000 new jobs were created in November, better than consensus forecast of 200k. Unemployment held steady at 4.1 percent. Wage growth was 0.2 percent, less than the 0.3 percent expected. Manufacturers hired 31,000 new workers and the unemployment rate in that sector slid to 2.6 percent. Restaurants and bars hired 18,900 workers in November, retail 18,700.
Wholesale inventories fell 0.5 percent in October, likely due in part to hurricanes. Because this dip was expected, it didn’t impact fourth quarter growth forecasts. The University of Michigan’s consumer sentiment survey fell to 96.8 in early December. It missed forecasts of 99. Most consumers said current conditions improved, but they became less optimistic about the future. The shift was mainly concentrated in high tax states that are set to lose state and local tax deductions under tax reform.
The U.S. Dollar Index rose every day this week. Fundamental factors such as tax reform are working in the greenback’s favor. Political turmoil surrounding Brexit boosted the dollar versus the British pound. EU officials sent the pound lower after saying a trade deal is unlikely by March 2019. The Canadian central bank held interest rates steady and the loonie tumbled in response. Both the euro and yen also weakened versus the dollar.
The S&P 500 Index outperformed the MSCI EAFE for the eighth time in eleven weeks. At one point this summer, iShares MSCI EAFE (EFA) was beating the SPDR S&P 500 (SPY) by 7 percentage points. That lead is down to 2 percent as we head into year-end. Only one month ago, iShares MSCI Emerging Markets (EEM) had a 16 percentage-point lead on SPY. That lead was cut in half over the past two weeks as Chinese shares slumped. EFA rose 0.01 percent this week, EMM 0.22 percent.
Crude oil settled into the mid-$50 range this week, spending most of the time between a $56 and $58 handle. Strong Chinese import demand and a potential strike in Nigeria kept prices from drifting lower. SPDR Energy (XLE) fell 0.57 percent.
Earnings news was mixed this week. Shares of Broadcom (AVGO) and Toll Brothers (TOL) fell after delivering results. Autozone (AZO), American Eagle Outfitters (AEO), lululemon (LULU) and Dollar General (DG). Shares of H&R Block (HRB) rose sharply.