Market Volatility Ahead of Fed Rate Decision
As the final monthly jobs report of the year was released, US stock futures oscillated, with investors scrutinizing the data for clues on the likelihood of interest-rate cuts in December and beyond. The Dow Jones Industrial Average and S&P 500 futures both edged up 0.1%, while Nasdaq 100 contracts gained roughly 0.2%.
Labor Market Rebounds, Unemployment Rate Ticks Up
The US economy added 227,000 jobs in November, surpassing expectations, as the labor market recovered from October’s data, which was impacted by severe weather and labor strikes. However, the unemployment rate unexpectedly rose to 4.2%. This mixed report largely met expectations of a “Goldilocks” reading – strong enough to alleviate economic concerns, but soft enough to keep the Federal Reserve’s options open on lowering rates.
Fed Rate Cut Odds Increase
Following the report, markets priced in around 90% odds of a quarter percentage point rate cut on December 18, up from 70% before the report. This increased optimism stems from the data’s indication that the economy is growing, but not too strongly, leaving room for monetary policy adjustments.
Bitcoin Rally Falters, Investors Hedge Against Pullback
Meanwhile, the bitcoin rally, which reached an all-time high above $100,000, began to lose steam, slipping to around $98,000. Options suggest some investors are preparing for a potential deeper pullback, despite hopes of support for digital currencies from President-elect Donald Trump, who recently named a “White House AI & Crypto Czar.”
Retailers Boost Profit Forecasts, Shares Jump
On the corporate front, Lululemon and Ulta Beauty shares surged in premarket trading after the retailers both raised profit forecasts, boosting investor confidence.
Economic Calendar and Earnings
Today’s economic calendar features nonfarm payrolls, unemployment rate, average hourly earnings, and labor force participation rate data. Earnings reports are expected from BRP, among others.
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