The Investor Guide to Fidelity Funds for December 2024 is AVAILABLE NOW! December Data Files Are Posted Below Market Perspective: Stocks Rally After Presidential Election A decisive presidential election helped spur […]
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.
The last trading week of November was cut short because of the Thanksgiving holiday, but that doesn’t mean that nothing of note happened. On Tuesday morning, the Conference Board (CB) Consumer Confidence report was released and came in at 111.7, which was slightly below the expected 111.8. Regardless, it was still higher than last month’s 109.6 and represents the highest figure since the January report came in at 114.8.
According to the CB, the figure was higher based on the expectation that jobs would be more readily available during December and into the beginning of 2025. Furthermore, consumers were more confident that their finances would improve during the first half of 2025. This was in large part because of optimism in the ability of the stock market to have a positive 2025.
On Tuesday afternoon, the Federal Open Market Committee (FOMC) released its meeting minutes from earlier in November. The main takeaway is that future cuts are more likely to be gradual to account for concerns about inflation that hasn’t fully eased. The market is currently split as to whether there will be a rate cut in December or if the Fed will decide to pause until its next meeting.
Interest rates are currently in a range between 4.5 percent and 4.75 percent, which is among the highest in the developed world. Prior to the November 5 election, there was optimism that rates could be pared back to about 3 percent by the end of 2025. However, there are some concerns about whether that is possible after President-Elect Donald Trump declared that he would place a 25 percent tariff on goods from Canada and Mexico as well as tariffs on goods from China. If imposed, those tariffs would almost certainly have an inflationary effect.
On Wednesday, the preliminary gross domestic product (GDP) figures from the third quarter were released. It was determined that the economy grew an estimated 2.8 percent during those three months, which matched analyst expectations.
Also on Wednesday, unemployment claim figures from the past seven days were released. During that period, 213,000 claims were made compared to an expected 215,000. It is also slightly lower than the 215,000 claims made a week ago.
Finally, the monthly Core PCE Price Index was made public and indicated that prices rose by .3 percent in October. This matched expectations and the rate of growth experienced in September when prices also rose by .3 percent.
The S&P 500 pushed back above 6,000 during the truncated trading week as it gained 1.44 percent over the past five trading days. At the close of trading Friday, the market stood at 6,032, which is close to an all-time high.
The Dow finished the week 44,910, which represents a 2.26 percent increase over the past five trading days. As with the S&P, the Dow is trading near its all-time high. On Tuesday morning, the Dow would make its low of the week at 44,445 while it would close at its high on Friday afternoon.
Finally, the Nasdaq finished the week at 19,218, which was an increase of 1.42 percent over the past five trading days. For the Thanksgiving week itself, the Nasdaq made a low of 18,943 on Wednesday afternoon and would finish the week just a touch off the week high of 19,221.
In international news, Australia announced on Tuesday that its annual inflation rate was at 2.1 percent, which was below an expected 2.5 percent. New Zealand announced that its main interest rate would remain at 4.25 percent.
This week features the JOLTS job openings report as well as the nonfarm payroll numbers for November. The ADP report is expected to say that the economy created 166,000 jobs in November while the Bureau of Labor Statistics (BLS) report is expected to say that the economy created 202,000 jobs over the past 30 days.
The November Issue of the ETF Investor Guide is AVAILABLE NOW! Links to the November Data Files have been posted below. Market Perspective: Inflation May Not Be Over Yet The […]
On Thursday, weekly unemployment claims data was released, and it revealed that 213,000 people applied for benefits over the past seven days. This was compared to an expected 220,000 claims and was also slightly lower than last week’s 219,000 requests for benefits.
On Friday, the Flash Manufacturing PMI and Flash Services PMI reports were made public. The Flash Manufacturing PMI came in at 48.8, which matched analyst expectations prior to the release. Meanwhile, the Flash Services PMI came in a 57, which was higher than the projected 55.2.
The figures continue to suggest that manufacturing is still struggling to gain traction in the United States, while demand for services is flourishing. Any figure below 50 indicates a contraction in the industry while figures above 50 represent expansion.
Ultimately, this could drive another period of inflation or at least prevent prices from coming down to the Fed’s 2 percent target. Depending on what future data says, the Fed may decide to hold off on future rate cuts or slow the pace of cuts over the next 12 months. Last week, Jerome Powell said that future cuts would be data dependent and that the road to 2 percent inflation would be a bumpy one.
Currently, it’s expected that the Fed will cut interest rates another 25 basis points when the Federal Open Market Committee (FOMC) meets on Dec. 18. However, recent data suggests that this is not a guarantee, and there has been speculation that other central banks may consider holding off on rate cuts as well.
The University of Michigan released its inflation expectation report on Friday morning, and respondents said that inflation would be at 2.6 percent at this point next year. Consumer sentiment came in at 71.8 compared to 74 earlier in November.
For the week, the S&P 500 increased 1.48 percent. The market made a low of 5,862 on Tuesday morning before reversing and hitting a high of 5,972 on Friday.
As with the S&P, the Dow was also up this week as it closed 1.92 percent higher at 44,296. The Dow would make its low of the week on Tuesday of 42,970 before reversing and closing at the high of the week.
Finally, the Nasdaq also finished higher over the past five trading days closing at 19,003. That represents an increase of 266 points or 1.42 percent. Unlike the S&P and Dow, the Nasdaq had a flatter curve as it opened at its lowest point of the week at 18,694 and would test that low two more times by Thursday.
In international news, Canada and Great Britain announced their inflation figures for October with both countries experiencing a slight uptick in CPI data. Great Britain also revealed that retail sales were down .7 percent in October while Canada announced its retail sales figure increased .4 percent.
The upcoming week features the Thanksgiving holiday on Thursday as well as Black Friday, which generally serves as an extension of that holiday. The week will be front-loaded to include the CB Consumer Confidence report on Tuesday as well as the preliminary gross domestic product (GDP) figures on Wednesday. Unemployment claims and the monthly Core PCE Price Index data will also be released on Wednesday morning.
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