THE WEEK ON WALL STREET
Key Wall Street benchmarks were up and down last week – or rather down and then up. A Tuesday retreat was offset by a Friday rally spurred by the Department of Labor’s November jobs report. While the S&P 500 managed to rise 0.16% for the week, the Dow Jones Industrial Average declined 0.13%, and the Nasdaq Composite ceded 0.10%. MSCI’s EAFE benchmark for international stocks retreated 0.25%.
HIRING SURPASSES EXPECTATIONS
Employers added 266,000 net new jobs last month, 79,000 more than economists surveyed by Dow Jones had projected. The main jobless rate ticked down 0.1% to 3.5%. The U-6 rate, counting both the unemployed and underemployed, also declined 0.1% to 6.9%. Wages grew 3.1% year-over-year, above the 3.0% Dow Jones estimate. These numbers do not indicate an economy cooling off. While they were influenced by the return of striking General Motors workers to their jobs, November hiring gains were spread across several categories.
MARKETS MIGHT WAIT INTO 2020 FOR A CHINA TRADE DEAL
The U.S.-China trade dispute has gone on for 21 months. Wall Street would like to see a new phase-one trade agreement signed this month, but the timeline could lengthen. On Tuesday, President Trump said that he was considering the option of waiting until after the 2020 election to sign off on such a pact. On December 15, the U.S. is slated to impose a new set of tariffs on around $160 billion of Chinese products. Tech companies are eyeing this date with concern.
THE WEEK AHEAD: KEY ECONOMIC DATA
Wednesday: The Federal Reserve makes its latest monetary policy statement, followed by a press conference featuring Fed Chairman Jerome Powell; also, the November Consumer Price Index appears.
Thursday: The Department of Commerce releases its November retail sales report.
THE WEEK AHEAD: COMPANIES REPORTING EARNINGS
Tuesday: AutoZone (AZO)
Wednesday: Lululemon Athletica (LULU)
Thursday: Adobe Systems (ADBE), Broadcom (AVGO), Costco (COST)
Holiday shopping is critical to the economy, accounting for about 20% of annual retail sales. This year’s calendar, however, does not favor retailers. The 2019 holiday shopping season is six days shorter than last year’s, as Thanksgiving fell on November 28. So, expect traders to keep close tabs on the pace of holiday spending, even with consumer confidence indices and stock benchmarks at high levels.
Trade talks with China will be front and center this week as the December 15 deadline approaches. Expect some volatility around the news related to President Trump and the trade talks. Stay tuned…