Market Indexes: It was a mixed market this week, with Monday and Tuesday continuing the pullback that started last week. However, Friday was a big up day, supported by the OPEC oil production cuts deal, and news of potential progress in the US-China trade talks.
Volatility: The VIX rose 7.9% this week, ending the week at $13.62, for its 2nd straight weekly gain.
High Dividend Stocks: These high yield stocks go ex-dividend next week: GCAP, KTB, LADR, OXY, SPTN, ECCB, GBDC, LGI, CTZ, EAD, GGT, M, NMFC, OCSL, ARCC.
Market Breadth: 17 out of 30 DOW stocks rose this week, vs. 23 last week. 55% of the S&P 500 rose, vs. 80% last week.
FOREX: The USD fell vs. most major currencies this week.
This Week’s Economic Reports: Non-Farm Payrolls rose by 266,000 new jobs in November, up from a revised level of 156,000 new jobs in October, and higher than economists’ forecasts of 180,000. The end of the GM auto-workers strike added ~ 50,000 jobs to the total.
The unemployment rate declined to 3.5% from 3.6%. The 12-month rate of hourly wage gains fell to 3.1% from 3.2%. Hours worked each week were unchanged at 34.4 hours. The government revised the increase in October new jobs to 156,000 from 128,000. September’s gain was revised to 193,000 from 180,000.
“Online sales rose more than 19.6% to $7.4B on Black Friday, marking the day’s largest revenue grab ever, according to Adobe (NASDAQ:ADBE) Analytics, which tracks transactions at 80 of the top 100 U.S. retailers. For Thanksgiving, it estimated web sales grew 14.5% to $4.2B, while Small Business Saturday and Super Sunday sales are projected to surpass $7.6B. Cyber Monday spending is expected to hit a record $9.4B, an 18.9% jump from a year ago.” (SA)
“U.S. factory activity contracted further in November amid a slump in new orders while construction spending unexpectedly fell, offering cautionary notes on an economy that had recently shown signs of growing at a moderate pace. The Institute for Supply Management (ISM) said its index of national factory activity dropped 0.2 point to a reading of 48.1 last month. A reading below 50 indicates contraction in the manufacturing sector, which accounts for 11% of the U.S. economy.
The ISM index needs to break below the 42.9 level to signal a recession in the broader economy. Economists polled by Reuters had forecast the index rising to 49.2 in November from 48.3 in the prior month.
November’s reading marked the fourth straight month that the index remained below the 50 threshold.” (Reuters)
“The Commerce Department said construction spending dropped 0.8% as investment in private projects tumbled to its lowest level in three years. Data for September was revised to show construction outlays declining 0.3% instead of rising 0.5% as previously reported. In October, spending on private construction projects dropped 1.0% to $956.3 billion, the lowest level since October 2016, after declining 1.1% in September. It was held down by a 0.9% decrease in spending on private residential projects. Outlays on residential construction dropped 1.1% in September.” (Reuters)
“China’s Finance Ministry said it would exclude some U.S. soybeans, pork and other commodities from tariffs. The government did not indicate how much of those products would be excluded. The move comes as the U.S. and China are attempting to reach a so-called phase one agreement on reducing trade tensions.” (MarketPulse)
“Factory orders rose 0.3% in October, the Commerce Department said Thursday. This is the first gain in three months. Orders in September were revised to a 0.8% drop compared with the previous estimate of a 0.6% fall.” (MarketPulse)
Week Ahead Highlights: Elections will be held in the UK next week, which will impact the Brexit situation. The market will be watching for any change in Interest Rate sentiment, when the Fed makes its FOMC announcement next Wednesday.
Next Week’s US Economic Reports:
Sectors: Energy led this week, with Industrials lagging.
Futures: WTI Crude rose 7.07% this week, finishing at $59.07, its highest close since mid-September, driven higher by a new production deal announced by OPEC on Friday:
“Saudi Arabia and Russia spearheaded a deal on Friday in which OPEC and its allies committed to some of the deepest oil output cuts this decade aiming to avert oversupply and support prices. The group of more than 20 producers agreed to an extra 500,000 barrels per day (bpd) in cuts for the first quarter of 2020, taking the total to 1.7 million bpd, or 1.7% of global demand. Brent oil rose 2% to more than $64 a barrel after Saudi Energy Minister Prince Abdulaziz bin Salman said effective cuts could be as much as 2.1 million bpd as Saudi would carry on cutting more than its quota.” (Reuters)
