Market Rally Continues as Jobs Report Meets Expectations
The US stock market saw a boost on Friday as investors reacted to the latest jobs report, which met expectations and hinted at potential interest-rate cuts in December. The Dow Jones Industrial Average rose 0.1%, while the S&P 500 climbed 0.4%, and the tech-heavy Nasdaq Composite surged 0.8%.
Jobs Report: A “Goldilocks” Reading
The US economy added 227,000 jobs in November, slightly above expectations, as the labor market rebounded from October’s data, which was impacted by severe weather and labor strikes. The unemployment rate unexpectedly ticked up to 4.2%. The report largely matched hopes for a “Goldilocks” reading – strong enough to alleviate concerns about the economy, but soft enough to keep the Fed’s options open on lowering rates this month and into next year.
Fed Rate Cut Odds Increase
Following the report, markets priced in around 91% odds of the Fed lowering rates by a quarter percentage point on December 18, up from about 70% before the report.
Bitcoin Rally Continues, But Investors Hedge Against Pullback
Meanwhile, the rally in bitcoin continued, with the cryptocurrency slipping to trade around $99,000. Options show some investors are hedging against a deeper pullback after the leading token’s record-breaking surge to over $100,000 for the first time. The rally has been spurred by hopes of support for digital currencies from President-elect Donald Trump, who named former PayPal COO David Sacks as his “White House AI & Crypto Czar.”
Retailers Boost Profit Forecasts
On the corporate front, shares of Lululemon and Ulta Beauty jumped in morning trading after the retailers both boosted profit forecasts.
Consumer Sentiment: Inflation Concerns Rise
The latest consumer sentiment survey from the University of Michigan revealed that consumers expect inflation to hit 2.9% in a year, a increase from last month’s expectation of 2.6%. Expectations for long-run inflation slipped higher, though, falling to 3.1% from 3.2% the month prior. Overall, consumer views on inflation varied based on political party.
Durable Goods Buying Conditions Improve
The survey also showed a large increase in buying conditions for durable goods, which boosted current economic conditions by more than 20%. However, this rise in durables was primarily due to a perception that purchasing durables now would enable buyers to avoid future price increases.
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