- Major indexes finished up; S&P 500 Index (+0.3%) posted first gain this week; Nasdaq +0.5, Russell 2000 Index +0.8% were top performers as tech stabilization continued.
- Industrials were top performing sector after news that President Trump plans to release infrastructure plan in January; consumer staples lagged.
- Positive breadth on NYSE (1.7:1), Nasdaq (1.6:1); exchange volume below-avg. (~96% of 30-day avg.).
- Treasury curve steepened; 10-yr. note yield +4 basis points (+0.04%) to 2.37%.
- Commodities: WTI crude oil (+1.2% to $56.59/bbl.) recouped some of prior day losses, COMEX gold -1.3% to $1250/oz., industrial metals mostly lower.
- Economic data: consumer credit expanded (+$20.5 billion vs. +$17.0 billion expected)
Overnight & This Morning
- Global equities leg up following nonfarm payrolls beat; major U.S. indexes all opened higher.
- European indexes broadly higher midday after U.K., EU reach initial Brexit deal that opened door for trade talks (details below). STOXX Europe 600 +1.0%, DAX +1.2%, CAC 40 +0.5%.
- Asian markets added to Thursday gains. Nikkei (+1.4%) jump spurred by upward revision to Q3 gross domestic product; China trade data doubled estimates (+12.3% vs. +6.0%).
- Treasuries holding steady. 10-yr. note yielding 2.37%.
- Commodities: Oil rebound continuing (+1.7% to $57.65/bbl.), gold still sliding (-0.2% to $1250/oz.) along with industrial metals.
- Economic data releases include Michigan Sentiment (99.0 expected), wholesale inventories (-0.4% expected).
- Nonfarm payrolls topped expectations, but wage growth came up short. This morning’s closely watched jobs report showed that employers added 228k jobs last month, topping estimates for a 195k increase. Revised October figures, though still robust, were downwardly revised to +241k from the initial +261k. The positive headline reading was belied by soft wage growth (+2.5% year over year versus 2.7% expected); however, the labor market remains tight with the unemployment rate holding at 17-year lows and labor force participation unchanged at 62.7%. Despite the weaker-than-expected increase in hourly earnings, the data is unlikely to deter the Federal Reserve from increasing the target fed funds rate when it meets next week.
- Brexit deal bolsters international stocks. Hopes for a deal in the first round of Brexit talks, which focused on citizen rights, financial terms, and the Irish border, faded earlier in the week. This news was a negative for markets given that a delay in the first round of negotiations could have pushed the second round (trade talks) back until March 2018, giving the U.K. and EU only a year to negotiate and ratify a trade deal before the U.K. would be fully removed from the EU in March 2019. However, a deal was made overnight which will allow the U.K. and EU to move on to trade discussions. This phase of negations could prove to be even more contentious than the first, but for now markets are just happy that progress is being made.
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- Change in Nonfarm, Private & Manufacturing Payrolls (Nov)
- Unemployment Rate (Nov)
- Average Hourly Earnings (Nov)
- Average Weekly Hours (Nov)
- Labor Force Participation & Underemployment Rates (Nov)
- Wholesale Inventories (Oct)
- Wholesale Trade Sales (Oct)
- Germany: Trade Balance (Oct)
- Germany: Current Account Balance (Oct)
- Germany: Imports & Exports (Oct)
- France: Industrial Production (Oct)
- UK: Industrial Production (Oct)
- UK: Trade Balance (Oct)
- UK: Nat’l Institute of Economic & Social Research GDP Estimate (Nov)
- BOE: Inflation Next 12 Months
- China: CPI & PPI (Nov)