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The two major pieces of information to come out this week were the inflation figures for November and the Price Producer Index (PPI) number for November.
On Wednesday, it was revealed that both traditional and core CPI were up .3 percent this past month, which was in line with expectations. In addition, inflation came in at 2.7 percent on an annualized basis, which was also what markets expected prior to the release. Annual inflation ticked up .1 percent since last month, but that fact is not considered enough to prevent another rate cut when the Fed meets later in December.
On Thursday, it was revealed that core PPI was up .2 percent on a monthly basis, which matched expectations. However, overall PPI figures were up .4 percent, which was higher than the anticipated .2 percent. Furthermore, the overall PPI number for last month was adjusted higher to .3 percent.
Also on Thursday, unemployment claims data for the last seven days was made available. Over that period, there were 242,000 requests for benefits compared to an expected 221,000. This data point was also cited as a reason why the Fed should still cut rates when it meets next week.
The S&P 500 lost 28 points this week to close at 6,051. This was a .47 percent drop over the past five trading days that saw the market do little more than meander between its high and low. On Tuesday morning, the S&P made its weekly low of 6,036 while it made its weekly high of 6,092 on Wednesday afternoon.
Like the S&P 500, the Dow gave up ground this week finishing 788 points lower than it started on Monday. That represented a 1.77 percent pullback for the index that closed the week at 43,828, The weekly high of 44,683 was established on Monday morning before it spent the rest of the week in freefall. On Friday morning, the market made its weekly low of 43,811.
Finally, the Nasdaq finished the week at 19,926, which was a gain of 90 points or .46 percent. The market would make its weekly low of 19,652 on Tuesday afternoon before reversing and making its weekly high of 20,041 on Wednesday afternoon. It would spend the rest of the week in a narrow trading range that sits near the index’s all-time high.
In international news, a number of central banks made interest rate decisions this week. Australia decided to keep its rate at 4.35 percent while Canada and Switzerland opted for cuts of 50 basis points. The Eurozone also opted to cut interest rates by 25 basis points to 3.15 percent in what is seen as an effort to prepare economically for the upcoming Trump administration.
Next week is the final full trading week of 2024, and there will be several major news releases to look forward to. On Monday, the Flash Manufacturing and Flash Services PMI numbers will come out. On Tuesday, core and overall retail sales figures for November will be made public while the Fed reveals its December interest rate decision on Wednesday afternoon.
On Thursday, final GDP and unemployment claims figures are released while Friday sees the release of core PCE Price Index data for November. In addition, the University of Michigan releases its final consumer sentiment and inflation expectation data for the month.
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With nonfarm payrolls reports being released last week, there was going to be a lot of market volatility. However, those reports were not the only important bits of information market participants were given.
On Monday, the ISM Manufacturing PMI report was released and came in at 48.4 compared to an expected 47.7. This suggests that manufacturing activity may be finding some traction after contracting for several months. Of course, anything below 50 suggests that a sector is still relatively weak, so it’s too early to say if manufacturing is ready to break out of its slump.
On Wednesday, the ISM Services PMI came in at 52.1, which was lower than the expected 55.7 and lower than last month’s 56. While still on the upswing, this report may indicate some weakness in service demand, which could put downward pressure on prices.
Also on Wednesday, the ADP nonfarm payroll report showed that employers added 146,000 jobs compared to an expected 152,000 new positions. Last month’s report was revised downward to 184,000.
Fed Chair Jerome Powell took part in a moderated discussion in New York on Wednesday. During the talk, he mentioned that monetary policy was solid and a relatively strong economy gave the Fed room to be cautious about upcoming rate decisions. There is some belief that the Fed will choose to pause at its December meeting as opposed to cutting rates an additional 25 basis points.
On Thursday morning, unemployment claims data were released and showed that 224,000 people requested benefits compared to an expected 215,000.
Friday saw the release of the Bureau of Labor Statistics (BLS) version of the nonfarm payroll report. It said that employers created 227,000 jobs compared to an expected 218,000. Furthermore, it was revealed that the economy added 37,000 jobs in October compared to the original report of just 11,000 new positions.
The unemployment rate inched up to 4.2 percent from 4.1 percent while average hourly earnings increased to .4 percent. Analysts had expected the unemployment rate to remain unchanged and hourly earnings to increase by .3 percent on a monthly basis.
Finally on Friday, the University of Michigan released its preliminary consumer sentiment and inflation expectation for December. It found that consumer sentiment was at 74 compared to 71.8 a month ago while inflation was expected to increase to 2.9 percent from 2.6 percent.
The S&P 500 was up .68 percent this week to close at 6,090. On Tuesday morning, the market made its weekly low at 6,039 before reversing and climbing as high as 6,097 on Friday morning.
Unlike the S&P, the Dow finished the week lower by 337 points to close at 44,642. It would make a weekly high of 45,060 on Wednesday before reversing and finishing near its weekly low.
The Nasdaq was up 2.94 percent this week to close at 19,859. It would make its low of the week of 19,280 at the open on Monday and would close at its highest point of the week on Friday.
The coming week will have a number of important news events on the calendar. Annual and monthly inflation data will be released on Wednesday, and it’s believed that the inflation rate will be .3 percent for the month and 2.7 percent for the year. Price change data will be released on Thursday along with unemployment claim information.
Central banks in Australia, Canada and Switzerland will be making interest rate decisions next week. Australia is expected to stand pat while Switzerland and Canada are expected to cut by 25 and 50 basis points respectively. The Eurozone is also expected to cut rates on Thursday, and all of these decisions may provide insight into what the Fed might do later in the month.
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