Market Update Week 49
Market Recap |
Week of Dec. 2 through Dec. 6, 2024 |
The S&P 500 index rose 1% this week, reaching new highs on gains in the consumer discretionary, communication services, and technology sectors. The remaining eight sectors in the S&P 500 fell on a weekly basis, yet the market benchmark ended Friday's session at a new closing high of 6,090.27. It also reached a fresh intraday high on Friday at 6,099.97 and is now up nearly 28% for the year to date. The weekly climb was driven by gains in retailers such as Lululemon Athletica (LULU) and Ulta Beauty (ULTA), which released better-than-expected fiscal quarterly results. The S&P 500 also got a boost from the shares of Meta Platforms (META) as a federal appeals court on Friday in Washington upheld a new US law that would result in a US ban of TikTok if its Chinese parent company doesn't sell the social media app by a Jan. 19 deadline. Also, on Friday, data showed US nonfarm payrolls rose by 227,000 in November, surpassing a Bloomberg survey's expected increase of 220,000 jobs. The unemployment rate rose to 4.2% in November from 4.1% in October, compared with expectations for no change. However, the labor force participation rate slipped to 62.5% from 62.6% in the previous month.  Next UpData due next week include the November consumer price index on Wednesday and the November producer price index on Thursday. Also, earnings reports are expected from companies including Oracle (ORCL), Adobe (ADBE), Broadcom (AVGO), and Costco (COST).
 JP Morgan Thought of the Week The U.S. labor market, while having cooled from its red-hot state, has settled into a relatively healthy position. Following a month of hiring disruptions due to hurricanes and strikes, businesses added 227K jobs in November. However, the uneven nature of recent job growth has led many to question the true health of the labor market. 2024 employment growth has been concentrated in a few key sectors, primarily health care and government, which have contributed 41% and 21% of this year’s job gains, respectively. Healthcare’s hiring dominance seems less concerning as the sector is still addressing pandemic-related backlogs. However, employment growth dominated by the public sector, which tends to see increased hiring later in the economic cycle, may be viewed as a warning sign. That said, there are important nuances to consider. Keeping in mind that government employment currently accounts for 14.7% of total payrolls, its 21% share of total job growth, 90% of which has come at the state and local level, appears less troublesome. Moreover, the sector’s share of payrolls remains below its pre-pandemic (2014–2019) average of 15.3%, suggesting its recent outsized growth reflects the continued uneven normalization of the labor market post-pandemic. Outside of these two sectors, sluggish manufacturing activity has been a headwind. Still, some cyclical sectors, including construction, leisure, and transportation have seen solid job gains this year. Despite data volatility, recent employment conditions and positive real wage gains have supported a resilient consumer and U.S. economy. With job openings back near pre-pandemic levels, this isn’t a labor market that is likely to boom, but it shouldn’t bust either. Steady economic growth and solid corporate profits should support a moderate pace of hiring in the year ahead. Source: https://am.jpmorgan.com/content/dam/jpm-am-aem/americas/us/en/insights/market-insights/wmr/weekly_market_recap.pdf
All the Best, Gordon@yourbestpathfp.com
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