With mixed reports on the strength of the labor market, all eyes will be trained on next week’s Fed meeting and the release of November CPI. Given the ambiguous read on the new data, we’ll touch briefly on the numbers and then move on to some fun facts.
There were multiple significant data releases related to the labor market this week, including the JOLTs Job Openings, ADP Employment Change, Non-Farm Payrolls, and Unemployment. Unfortunately, they did not provide much clarity on the strength (or lack thereof) of the labor market, as each told a different story.
- JOLTs Job Openings: 8.7M vs. 9.3M vs. 9.4M (Negative)
- ADP Employment Change: 103K vs. 130K vs. 106K (Negative)
- Non-Farm Payrolls: 199K vs. 180K vs. 150K (Positive)
- Unemployment Rate: 3.7% vs. 3.9% vs. 3.9% (Positive)
*Actual vs. Consensus vs. Last Month
With no clear narrative from the data, there are no new takeaways, which means the longer-term story remains intact. Looking more closely at the trend, the labor market has certainly cooled. Now, it appears the downtrend may be stabilizing. And if future data releases can corroborate that, we could be moving forward at a sustainable rate.
Moving on from the labor market, we’ll share some fun facts we’ve come across over the last couple of weeks:
- Everything Rally. November was the 16th time since the start of 1979 that the S&P 500, Nasdaq Composite, and Russell 2000 all rallied at least 7.5% in the same month. Following the 15 prior occurrences, the median returns over the next year were +13.2% for the S&P 500, +16.9% for the Nasdaq, and +13.1% for the Russell 2,000. (Source: Bespoke)
- Bonds Also Boomed. The Bloomberg US Aggregate Bond Index is one of the broadest measures of the US bond market. With a total return of over 4% in November, the index had its best month since May 1985 and its 12th monthly gain of 4% or more since 1976. (Source: Bloomberg)
- Can the Party Keep Going? In the 24 prior years since 1945, when the S&P 500 was up 15% or more YTD through the end of November, its median gain in December was 1.96%, with positive returns 75% of the time. In the ten most recent occurrences since 1995, the median gain has been 2.1%, with positive returns 90% of the time. (Source: Bespoke)
- I Can Drive. Through 11/27/23, the national average price of a gallon of gas declined for 61 straight days, just the fifth streak where prices fell for at least 50 days in a row. Now at $3.20 per gallon, the national average price is down 17.5% from its mid-September high and is now lower on the year. (Source: AAA)
And finally, we hope everyone who started their Hanukkah celebrations this week enjoys quality time with family and friends.
Economy
- Markets continue to push higher, with the S&P 500 up 0.2%, the Nasdaq up 0.7%, and the small-cap Russell 2000 up 1.0%. Mixed reports on the strength of the labor market did not seem to impact the market much, with all eyes on next week.
- The average 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) in the U.S. fell by 20bps to 7.17% in the week ended December 1st, 2023, the lowest since mid-August.
- Average hourly earnings for all employees on U.S. private nonfarm payrolls rose by 0.4% in November. That marks the most substantial increase in wages in four months.
- A preliminary estimate showed that the University of Michigan’s consumer sentiment for the U.S. surged to 69.4 in December, rising from 61.3 in the previous month and surpassing market expectations set at 62.0.
Stocks
- U.S. equities were in positive territory. Consumer Discretionary and Communication Services were the top performers, while Energy and Materials lagged. Growth stocks led value stocks, and small caps beat large caps.
- International equities closed lower for the week. Developed markets fared better than emerging markets.
Bonds
- The 10-year Treasury bond yield increased 2 basis points to 4.24% during the week.
- Global bond markets were in positive territory this week.
- Corporate bonds led for the week, followed by government bonds and high-yield bonds.
