Market Perspective for December 7, 2019

Equities rallied Friday after a strong employment report. The Bureau of Labor Statistics stated employers created 266,000 new jobs in November. The return of striking General Motor’s workers accounted for approximately 40,000 of the gains.

The consensus forecast was 180,000 new jobs including those GM workers. The unemployment rate declined to 3.5 percent and wage growth was a solid 0.2 percent. In addition to November’s gains, the government revised its September and October totals. There were 41,000 more jobs than previously reported. This report follows a strong jobs report in October that also included substantial upward revisions to the prior two months.

The S&P 500 Index rallied 0.91 percent on Friday and 0.14 percent for the week. The Nasdaq gained 1.00 percent on the day, though is decreased 0.11 percent on the week. The Dow Jones Industrial Average achieved even better performance, returning 1.33 percent on Friday.

Energy, consumer staples, healthcare and financials were the best performing sectors. SPDR Energy (XLE) rallied 1.46 percent after OPEC agreed to cut production by 500,000 barrels per day. Crude oil increased to $59 per barrel. SPDR Consumer Staples (XLP) advanced 1.06 percent, SPDR Healthcare (XLV) 0.91 percent and SPDR Financials (XLF) 0.71 percent.
Manufacturing PMIs were mixed. The Markit survey increased, while the ISM survey decreased. U.S. manufacturing remains stronger than Europe and China. Motor vehicle sales increased at an annualized pace of 17.1 percent in November.
Consumer confidence spiked in early December. The University of Michigan’s advance reading jumped to 99.2, up from 96.8. The strong labor market is undoubtedly contributing to rising consumer sentiment.

The 10-year Treasury yield climbed to 1.84 percent. Still, floating rate funds were up sharply this week. Invesco Senior Loan (BKLN) rallied 1.07 percent and iShares iBoxx High Yield Corporate Bond (HYG) 0.38 percent.

iShares MSCI Emerging Markets (EEM) advanced 1.22 percent on hopes for a trade deal next week. If there is no deal by next Sunday, December 15, the U.S. will increase tariffs on Chinese imports. Foreign markets also benefited from a rallying British pound ahead of the United Kingdom’s upcoming general election. The pound advanced 1.62 percent versus the dollar. That helped the euro, and both weighed on the U.S. Dollar Index, which fell 0.50 percent. (CRM), ZScaler (ZS), Aerovironment (AVAV), Land’s End (LE) and WorkDay (WDAY) were among the firms beating earnings estimate this week. Land’s End saw the strongest move. It gained 27.76 percent for the week.

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