Market Perspective for December 2, 2019

Equities pulled back on Monday, with the S&P 500 Index losing 0.86 percent.

Consumer staples was the best performing sector on Monday. SPDR Consumer Staples (XLP) advanced 0.23 percent. Boeing (BA) pulled the industrial sector lower. SPDR Industrial (XLI) slipped 1.65 percent.

Trade talks with China hit a snag with China demanding a tariff rollback and the U.S. threatening higher tariffs if there’s no deal by December 15. China was also upset about a Congressional bill related to its policies in Xinjiang province. This follows last week’s passage and signing by President Trump of a bill that supports Hong Kong protestors. Investors took the news in stride, with iShares China Large-Cap (FXI) gaining 0.02 percent on the day.

The Markit manufacturing PMI increased to 52.6 in November, up from 52.2. Although subcomponents didn’t signal an all-clear for China, its manufacturing PMI came in stronger than predicted.

Motor vehicle sales numbers will be released on Tuesday. Analysts expect an annualized sales pace of 17 million.

Friday brings the November employment report. Striking GM workers returned to work last month. Economists expect they will boost the net new job total to 189,000. They also see wage growth improving. The University of Michigan’s advance consumer sentiment survey for December is also out.

Crude oil gained 1.49 percent ahead of a December 5 OPEC meeting this week. Oil fell last week after a report said Saudi Arabia may boost production in response to cheating by other OPEC members. The oil cartel and Russia agreed to cuts more than a year ago. Russia also signaled it could extend the deal but will not cut production any further.

Earnings season is nearly complete. This week brings several cloud-software company reports including (CMR), Workday (WDAY), Coupa (COUP) and MongoDB (MDB). Marvell Technology (MRVL), Five Below (FIVE), Campbell Soup (CPB), H&R Block (HRB), Dollar General (DG), Ulta Beauty (ULTA) and Kroger (KR) are also on tap. Canadian banks including Bank of Montreal (BMO), Royal Bank of Canada (RY) and Canadian Imperial Bank of Commerce (CM) report later in the week.

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