The futures markets were trading well in the green this morning, both before and after the release of the ADP (ADP) Employment Report. This showed that private employers added around 146,000 jobs in November, as larger employers continued to add to their payrolls. Construction (up 30,000 jobs) and education and health services (up 50,000 jobs) were some of the areas that gained the most. Elsewhere, in the market, shares of Footlocker (FL), a major shoe retailer, are down considerably, after reporting an outlook for a weaker Christmas shopping season and cutting their sales and earnings projections. Later today, the release of the Institute for Supply Management’s Services Purchasing Managers’ Index and the Federal Reserve’s Summary of Commentary on Current Economic Conditions, commonly known as the Beige Book, will be released, which may well affect trading later today.
The stock market started out negatively yesterday, following Monday’s strong move higher. The Job Opening and Labor Turnover Survey (JOLTS) showed that 7.7 million openings were available across the U.S., suggesting little change to a relatively tight labor market. Though the major indices recorded a decline in the early portion of the session, they trended higher throughout much of the day, and the S&P 500 even hit an intraday all-time high. Overall, the S&P 500 increased three points (up 0.05%), while the NASDAQ rose 77 points (up 0.40%). The Dow Jones Industrial Average fared a bit worse, declining 76 points (down 0.17%). A key difference in the performance of these indices was the positive momentum in Meta (META), which posted a decent gain yesterday and is not part of the 30-stock Dow Jones index. Moreover, market breadth was somewhat negative, with decliners outpacing advancers by a 1.4-to-1.0 ratio. Communications stocks were amongst the best performers on the day, while utility equities were amongst the weakest.
In commodities news, oil prices rose considerably yesterday, as the Organization of Petroleum Exporting Countries Plus was expected to announce that production cuts would last into 2025. The U.S. Treasury Bond yields were mixed yesterday, falling early in the trading session as investors bought bonds. However, yields were higher at the end of the day, as traders sold these safe-haven assets to chase stock market returns. The Chicago Board Options Exchange Volatility Index, or VIX, commonly known as the fear index, finished just off of breakeven levels, after a choppy day of trading.
Looking ahead, several economic reports will be released in the coming days. These include initial jobless claims and the U.S. Trade deficit on Thursday. On Friday, the closely watched U.S. employment report and unemployment rate for November from the Labor Department, and the University of Michigan’s Consumer Sentiment Index are on the docket. Additionally, several Federal Reserve regional presidents are slated to give commentary on the broader economy and fiscal policy in the days ahead. On the earnings front, a few dozen mostly-smaller companies will report quarterly results in the days ahead, though we remain well past peak earnings season, suggesting more eyes will be on the economic data releases. - John E. Seibert III
At the time of this article’s writing, the author held positions in none of the companies mentioned.
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