ND&S Weekly Commentary 12.12.23 – Santa Rally Continues

Thanks, Santa, for the new yearly high for the S&P 500 and a softer landing, Ho, Ho, Ho!

The S&P 500 closed the week at a new high for the year after the November jobs report signaled a stable economy.

Most of the major indexes finished the week with gains. The S&P 500 added 0.24%, the Dow Jones Industrials rose 0.04%, and the Nasdaq advanced 0.70%. International developed (EAFE) gained 0.39% while emerging markets slid -0.70% due to China’s economic sluggishness.

The November non-farm payroll report, which was expected to remain the same, showed that the unemployment rate fell to 3.7% from 3.9% the prior month. There were 199,000 jobs added up from the 150,000 job increase in October. Additionally, the University of Michigan consumer survey showed a decline in inflation expectations, and consumers expect the annual inflation rate to be roughly 3.1% a year from now. This is down from the 4.5% rate in the November survey.

The price of US crude oil declined 4% for the week, settling at $71.23 a barrel. In an effort to raise prices, several members of OPEC have promised production cuts of 2.2 million barrels-per-day for the first Qtr. of 2024. The price of gold fell over 3% last week, but remains above the psychological support level of $2,000 per ounce.

The employment reports bounced bond prices around during the week. Yields ended the week largely unchanged. The US 10-year Treasury finished at a yield of 4.23%.

Economists and investors continue to wrestle with what the Federal Reserve will do. The FOMC meeting is scheduled for this week. Though there are no expected changes to the Federal Funds rate, the Fed’s commentary will be the salient topic.

Economic data for this week will include the November consumers and producer price indexes, initial jobless claims, and retail sales.

“I will honor Christmas in my heart, and try to keep it all year.”-Charles Dickens