The major stock market averages posted solid gains last month. November saw the Dow Jones Industrial Average and NASDAQ Composite rise 3.7% and 4.5% respectively, while the benchmark Standard & Poor’s 500 Index gained 3.4%. Equities benefited from things such as optimism around trade negotiations between the U.S. and China, an accommodative Federal Reserve, and earnings reports that came in on average, better-than-expected. Last week specifically was light on trading volume, headline news, and data due to the Thanksgiving holiday, but things change in the week ahead.
December (which is historically a strong month for stocks) kicks off with a data deluge, as a large quantity of important economic reports are scheduled for release. Construction Spending, the ISM Manufacturing Index, the ISM Non-Manufacturing Index, Initial Unemployment Claims, Factory Orders, and Consumer Sentiment are among the reports markets will be digesting. The most notable report however, is the November Jobs Report due out on Friday, released by the U.S. Department of Labor. Consensus expectations are for the economy to add about 185,000 jobs while the unemployment rate is seen holding steady at 3.6% (which is near a 50-year low). Average Hourly Earnings are seen rising .3 percent.
A handful of companies are also reporting earnings this week, including Salesforce.com, Workday, Campbell Soup, Dollar General, and Tiffany.
With all of this incoming data, investors should be conscious about avoiding “paralysis by analysis”. Also, we never pay too much attention to any one data point, but rather focus on what the “big-picture” is indicating. We’ll be watching to gauge whether the totality of data suggests the economy is showing some signs of picking up (or not), and whether some may have overestimated the impact of the “trade-war” (or not). Going into December, two key focal points will be the outcome of trade talks where there is a December 15th deadline for a new round of tariffs, and the trajectory of the U.S. and global economy.
As always, please contact us with any questions you may have, or if you would like to schedule a meeting.
All the best – Southport Station Financial Management, LLC