The November jobs report is the big event for markets in the coming week, and it could provide important information on the trajectory of Federal Reserve interest rate hikes. Stocks were higher in the shortened holiday week, with the S&P 500 rising as Treasury yields slipped and the dollar weakened. The post-Thanksgiving week will be relatively busy, filled with economic data on jobs, inflation, manufacturing and spending. There’s also a flurry of Fed speakers, including Fed Chairman Jerome Powell with a timely speech Wednesday at the Brookings Institution on labor and the economy. “It’s all about the jobs report. We know that’s what the Fed is really focused on,” said Kathy Jones, chief fixed income strategist at the Schwab Center for Financial Research. “So obviously that’s going to be a big part of their thought process – how is the labor market doing and if we see that slack that they want to see. The euphemism for slack is higher unemployment.” The labor market cooled only slightly as other sectors of the economy slowed. Wage gains and labor shortages have helped propel inflation. Economists see Fed rate hikes reducing job growth and possibly even turning negative. But the labor market proved more resilient than expected, challenging the Fed’s efforts to control inflation by slowing economic activity. Economists expect the economy to add 208,000 jobs in November, compared to 261,000 in October, according to Refinitiv. “The estimate is you need about 100,000. That’s the balance, so we’re using over 200,000,” Schwab’s Jones said. “It suggests that the labor market is still quite tight. So some slowdown is likely to happen over time. I think that will happen sooner rather than later.” The Fed will then meet on December 13-14 and is expected to raise its target federal funds rate by half a percentage point. Friday’s jobs data will be the last monthly jobs report before this meeting. The December 13 consumer price index is considered the most important data ahead of the Fed’s December 14 rate decision. If the jobs report is stronger than expected, there are concerns that the Fed will continue to hike at the pace of three-quarters of a point, the size of its last four rate hikes. If it is weaker, economists still expect a half-percentage-point hike, but the outlook for future rate hikes could change if the data becomes much weaker. “Bad news is good” “Right now, bad news is good news for the market, and it could probably stay that way until the Fed meets or maybe until the Fed meets “, said Scott Redler, partner of T3Live.com. “Right now the market is half full rather than half empty.” Besides the jobs report, there’s the Job Openings and Labor Rotation Survey (JOLTS) report on Wednesday, as well as the Fed’s Beige Book on economic activity. Personal consumption expenditure data for October on Thursday will provide an update on consumer spending, but it also includes the PCE deflator, a key measure of inflation monitored by the Fed. Monthly vehicle sales and the ISM manufacturing survey are also released on Thursday. The consumer will be at the center of concerns, after the traditional launch of the holiday shopping season the day after Thanksgiving. Investors will be watching reports on the strength of Black Friday weekend buying, as well as Monday’s “Cyber Monday” buying. “Whatever view you want to have on the consumer right now, you can find a data point to support it,” said John Porter, chief investment officer of Newton Investment Management. October retail sales jumped a surprising 1.7%, but consumer confidence in November was weaker. “You see a lot of people struggling with conflicting data points. Some people are pointing to strong consumer credit trends as a signal that consumers will continue to spend,” Porter said. “But then you see auto loan data. Credit quality is deteriorating. On the fringe, you see the consumer going down and being more price sensitive.” Porter said the job count is the most important data of the week, but it may not tell the whole story. “You have this unique dynamic, where you’ve seen the well-publicized job cuts and hiring freezes in Silicon Valley,” he said. These numbers may not make a big difference in the overall job picture. “Every downturn is characterized by its own catalysts. It’s weird, where you have the chairman of the Fed standing on the podium begging people to act more conservatively. But then if you try to fly anywhere , planes are sold out. Prices are crazy,” Porter added. “If he could talk to CEOs across the country, Powell would ask them to be more careful with their R&D spending to limit hiring.” Porter expects the Fed to hike rates several times and then keep them high. “[Powell] needs to see demand slow down a bit to help it,” he said. “He’s desperately trying to get people to slow down their behavior.” Technically speaking, the major indices were higher last week Utilities and Materials were the strongest sectors, with Consumer Discretionary and Technology posting the smallest gains.The Dollar Index was down 0.7% for the week, while the Treasury yield at The closely watched 10-year fell slightly to 3.73% on Friday.Redler said he was targeting an area around the 200 200-day moving average on the S&P 500 as the next potential upside move. 4,059 on Friday, about 30 points above Friday morning’s trading level The 200-day is a momentum indicator and is simply the average of the “Hold above 4,000 as we await the report on the employment and these other economic relations, will be it constructive for one more movement before Christmas,” he said. the end of the year. Apple, the largest stock by market capitalization, was under pressure on Friday as labor unrest continued at the factory of its Chinese supplier Foxconn. “Apple could be a factor for tech as the S&P needs to digest above 4,000,” he said. Calendar for the coming week Monday Earnings: Azek 12:00 a.m. New York Fed President John Williams Tuesday Earnings: Hewlett Packard Enterprise, NetApp, CrowdStrike, Intuit 9:00 a.m. S&P/Case-Shiller home prices 9:00 a.m. real estate FHFA 10:00 a.m. Consumer Confidence Wednesday Earnings: Salesforce, Box, Petco, Pure Storage, Splunk, Five Below, Hormel, Snowflake, Octa, Royal Bank of Canada, PVH, Victoria’s Secret, Synopsis, La-Z-Boy 8:15 a.m. Jobs ADP 8:30 a.m. Q3 Real GDP Second Reading 8:30 a.m. Leading Economic Indicators 8:50 a.m. Fed Governor Michelle Bowman 9:45 a.m. Chicago PMI 10:00 a.m. Pending Home Sales 10:00 a.m. JOLTS 12:35 p.m. Fed Governor Lisa Cook 1:30 p.m. Federal Reserve Chair Jerome Powell will speak at a Brookings Institution event on the outlook for the economy and developments in the labor market. 2 p.m. Beige Book Thursday Monthly Vehicle Sales Earnings: Kroger, Zscaler, ChargePoint, Dollar General, Ulta Beauty, Ambarella, Lands’ End, Ambarella, Designer Brands, American Outdoor Brands, Asana, Marvell Tech, Big Lots, Toronto Dominion, Bank de Montréal, Canadian Imperial Bank, Zumiez 8:30 a.m. Initial unemployment claims 8:30 a.m. Personal income/expenditure 8:30 a.m. Personal consumption expenditure 9:00 a.m. Fed Governor Bowman 9:45 a.m. Manufacturing PMI 10:00 a.m. ISM 3:00 p.m. Fed for Oversight Michael Barr Friday Earnings: Cracker Barrel 8:30 a.m. November Jobs Report 10:15 a.m. Chicago Fed Chairman Charles Evans
#November #jobs #report #Fed #matter #markets #week #ahead