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Crucial jobs report kicks off December trading: What to know this week

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Crucial jobs report kicks off December trading: What to know this week

Stocks will enter the final month of 2024 near record highs as investors look to cap off what’s been another stellar year for US stocks.

During last week’s holiday-shortened trading, the Dow Jones Industrial Average (^DJI) rose more than 2%. Meanwhile, the Nasdaq Composite (^IXIC) and the S&P 500 (^GSPC) rose more than 1%. Both the S&P 500 and Dow Jones ended November at all-time highs.

In the week ahead, a crucial run of labor market data is set to greet investors, with Friday morning’s November jobs report from the Bureau of Labor Statistics serving as the week’s most important release. Updates on job openings and private wage growth, as well as readings on activity in the services and manufacturing sectors, will also scatter the schedule.

Investors will look to this week’s economic data for clarity on the Federal Reserve’s next move on interest rates, which will be announced on Dec. 18.

In corporate news, earnings from Salesforce (CRM), Okta (OKTA), and Lululemon (LULU) will highlight the coming week’s schedule.

Expectations for future rate cuts from the Federal Reserve have shifted in recent months.

As of Friday, markets were pricing in a 66% chance the Fed cuts rates at its final meeting of the year on Dec. 18, per the CME FedWatch Tool. But looking out further, markets are pricing in just two more rate cuts over the next year, with concerns growing about the Fed’s progress on bringing down inflation.

A labor market that continues to slow, but not dramatically, also likely keeps the Fed focused on inflation, which makes a less compelling case for aggressive rate cuts in 2025. An update on that narrative will come with the November jobs report, due for release at 8:30 a.m. ET on Friday.

Economists expect the report to show a reversal of the dismal October employment report that many believed was heavily impacted by hurricanes and worker strikes.

The November report is expected to show the US labor market added 200,000 jobs in the month, up from the 12,000 monthly job additions seen in October. Meanwhile, the unemployment rate is expected to have inched up to 4.2% from 4.1%.

“Through the monthly swings of nonfarm payrolls, we expect the November employment report to reiterate that while the labor market remains solid in an absolute sense, the softening trend in employment conditions has yet to cease,” the Wells Fargo Economics team led by Jay Bryson wrote in a note to clients. “That message is likely to come through more clearly from the unemployment rate, which we look to rise to 4.2%.”

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