Week in Review: December 6, 2024

December 9, 2024

Recap & Commentary

Markets drifted higher over the course of the week with the S&P 500 again ending at a new record high. Markets were boosted by strong Thanksgiving sales figures, some positive comments from Fed officials regarding the chances for another rate cut in December, and November’s strong jobs report.

Speaking at a conference on Monday, Fed Governor Christopher Waller said current Fed policy remains restrictive without creating “undesirable weakness” in the labor market, and that he expects rate cuts to continue over the next year. Regarding the Fed’s December meeting, Waller said, “I lean toward supporting a cut to the policy rate.”

Outside of the US, the week was marked by significant political upheaval around the globe. In France, the government fell after lawmakers from the political extremes voted to oust the Prime Minister, three months after President Macron appointed him, leaving the country in political paralysis at a time when the EU faces a number of challenges. In Romania, the country’s top court annulled the Presidential election results claiming they were corrupted by Russian interference. In South Korea, the country was cast into turmoil when the President briefly enacted martial law only to see Parliament overturn his decision and move to impeach him. And in Syria, after years of civil war, a lightning offensive by militants toppled the government of President Bashar Al-Assad in just two weeks ending his family’s dictatorial rule over the country for the past 53 years. Assad’s fall will likely further complicate an already complex and volatile situation in the Middle East.

Economic Commentary

Nonfarm payrolls exceeded expectations, adding 227K jobs in November, up from October’s paltry gains of 36K. However, just as October’s report was negatively impacted by hurricanes Helene and Milton and the Boeing strike, the reversal and recovery from those events likely provided a temporary positive boost to November’s jobs numbers. Unlike the establishment data which pointed to strong job growth, the household survey data used to calculate the unemployment rate showed 355K individuals lost jobs in November, helping push the unemployment rate up 0.1% to 4.2%. The increase likely would have been larger were it not for 193K individuals exiting the labor force.

According to industry group Institute for Supply Management, manufacturing activity contracted for the eight consecutive month, however, it did so at a slower pace than in October. New orders grew slightly for the first time in eight months, while employment continued to contract, albeit at its slowest pace in five months. The service sector fared better, expanding for the fifth consecutive month, though at a slower pace than expected. Both employment and new orders were positive but down from October’s levels

Consumer sentiment rose to its highest level since April aided by upbeat views of current expectations which were partially offset by decreased future expectations. One-year inflation expectations jumped 0.3% to 2.9%; not enough to change monetary policy but Fed officials will certainly take notice.

Of Note

According to industry group Adobe Analytics, between 10am and 2pm on Black Friday, consumers spent $11.3M per minute. The frenetic pace helped increase online sales 10.2% from last year to a record $10.8B.

Market Indices   (As of 12/06/2024)

• Consumer Inflation (CPI)
• Producer Inflation (PPI)
• Weekly Jobless Claims