Market Perspective for December 3, 2018

Stocks jumped on Monday morning after President Trump and Chinese President Xi Jinping agreed they would impose a truce to the trade war. China may also reduce auto tariffs that were hiked to 40 percent as part of the ongoing dispute.

Energy, technology, consumer discretionary and materials led the market. The Nasdaq gained 1.51 percent. SPDR Technology (XLK) rose 2.21 percent and SPDR Energy (XLE) 2.22 percent. Emerging market funds also rebounded. iShares China Large Cap (FXI) advanced 1.64 percent on Monday and the Chinese yuan rallied more than 1 percent.

Manufacturing PMIs showed the U.S. manufacturing sector improved in November. The Markit number slipped from 55.4 to 55.3, but the ISM survey climbed from 57.7 to 59.3.

Friday’s employment report will be telling. Economists expect 190,000 new jobs, down from 250,000 a month earlier. The consensus forecast calls for 3.7 percent unemployment and wage growth of 0.3 percent.

Crude oil rebounded along with equities on Monday, climbing above $53 a barrel for the first time in a week. Natural gas fell on the day as it consolidates following last month’s price surge.

The 10-year Treasury yield declined to 2.99 percent, the first time it traded under 3 percent since mid-September.

Autozone (AZO), Dollar General (DG), Toll Brothers (TOL), Hewlett Packard Enterprise (HPE), Lululemon (LULU), Okta (OKTA), American Eagle Outfitters (AEO), H&R Block (HRB), Five Below (FIVE), Broadcom (AVGO), Kroger (KR), Ulta Beauty (ULTA), Thor Industries (THO) and Big Lots (BIG) all report earnings this week.

Note: Markets and government offices will close on Wednesday in observance of former President George H.W. Bush’s funeral. Economic data provided by the government and scheduled for Wednesday release will be delayed until Thursday.

 

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