Stocks are set to enter the final month of 2024 near record highs as investors look to end what has been another great year for US stocks.
During last week’s truncated trading, the Dow Jones Industrial Average (^DJI) rose more than 2%. Meanwhile, the Nasdaq Composite (^IXIC) and S&P 500 (^GSPC) rose more than 1%. Both the S&P 500 and the Dow Jones ended November at record highs.
A crucial set of labor market data will hit investors in the coming week, with Friday morning’s jobs report from the Bureau of Labor Statistics set to be the biggest news of the week. Updates on vacancies and private wage growth, as well as figures on activity in the services and manufacturing sectors, will also be distributed by the scheme.
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 December 18.
In company news, earnings from Salesforce ( CRM ), Okta ( OKTA ) and Lululemon ( LULU ) will highlight next week’s schedule.
Expectations for future interest rate cuts by the Federal Reserve have shifted in recent months.
On Friday, markets were pricing in a 66% chance that the Fed would cut rates at its final meeting of the year on December 18. according to the CME FedWatch Tool. But looking further, markets are pricing in only two more rate cuts in the coming year, increasing concerns about the Fed’s progress in reducing inflation.
A labor market that continues to slow, but not dramatically, is also likely to keep the Fed focused on inflation, making a less compelling case for aggressive rate cuts in 2025. An update on that story will come in the November jobs report, due out soon. at 8:30 a.m. ET on Friday.
Economists expect the report to show a reversal from October’s dismal employment report, which many thought was hit hard by hurricanes and worker strikes.
From the November report, the U.S. labor market is expected to have added 200,000 jobs this month, up from 12,000 monthly job additions in October. Meanwhile, the unemployment rate is expected to have risen from 4.1% to 4.2%.
“With monthly fluctuations in nonfarm payrolls, we expect the November employment report to reiterate that while the labor market remains solid in absolute terms, the softening trend in working conditions has not stopped,” says the Wells Fargo Economics team led by Jay Bryson. wrote in a note to customers. “That message will likely come across more clearly from the unemployment rate, which is expected to rise to 4.2%.”