3 Things… 

1. Equity Trends: S&P500 is just above its 200-day now serving as support, trend is barely DOWN but trying to shift with the index about 0.19% ABOVE its 200-day MA; the NASDAQ is trading near its previous recent highs and is about 5.25% below its 200-day MA, strong DOWN trend remains intact; Dow now STRONG UP trend 5.68% above its 200-day MA and is valiantly trying to hold new Bull status established Wednesday, today at 19.4% above its last bottom of 28,725.51. About 91% of the S&P 500 and 57% of the NASDAQ, and 97% of the Dow, respectively, are above their 50-Days; Bulls25:Bears40; VIX -3.30% [1]
2. Bonds: 10Y 3.53%; 2Y 4.25%; 30Y 3.64%; 3-Mo 4.33% [2]
3. Sectors: Best 3-month sectors: Energy (+14.02%); Materials (+13.25%); Healthcare (+12.09%); Crypto/Bitcoin +0.04% (16,986); [3]

This Week’s Quotable

The materials sector is on a rally that could be the start of a long-term run, according to Frank Gretz, technical strategist at Wellington Shields.

“In less than two months every stock in the group had gone from below its 50-day moving average to above that average. There is a small sample here, but all of the occurrences showed positive returns in the next 2 to 12 months,” Gretz said.

The Materials Select Sector SPDR Fund is up about 0.6% on the day and is now up more than 15% over the past month.

Reported by CNBC Friday. [4]

Recent Highlights

• Nonfarm Payrolls increased by 263,000 (12/02)
• Unemployment Rate remained flat at 3.7% (12/02)
• Average Hourly Wage Rate increased by 0.6% (12/02)
• Average Workweek decreased to 34.4 (12/02)

In the Markets

U.S. stock markets closed mixed after a choppy season on Thursday. Market participants assessed a series of crucial economic data. Moreover, investors were waiting for key labor market data to be released on Friday. The Dow ended in negative territory while the Nasdaq Composite finished in positive zone. The S&P 500 fell marginally.

How Did the Benchmarks Perform?

The Dow Jones Industrial Average (DJI) tumbled 0.6% or 194.76 points to close at 34,395.01. Notably, 16 components of the 30-stock index ended in negative territory, 13 in positive zone, while one was unchanged. At its session low, the blue-chip index was down nearly 460  points.

The tech-heavy Nasdaq Composite finished at 11,482.45, gaining 0.1% due to strong performance of large-cap technology stocks. The major gainer of the tech-laden index was Splunk Inc. (SPLK), shares of which jumped 17.8%.

The S&P 500 dropped marginally by 0.1% to end at 4,076.57. Six out of the 11 broad sectors of the benchmark index closed in negative territory, while five in positive territory. The Financials Select Sector SPDR (XLF) fell 0.6%, while the Communication Services Select Sector SPDR (XLC) rose 0.6%.  

The fear-gauge CBOE Volatility Index (VIX) was down 3.6% to 19.84. A total of 11.7 billion shares were traded on Thursday, lower than the last 20-session average of 11.3 billion. The S&P 500 posted 32 new 52-week highs and no new 52-week lows. The Nasdaq Composite registered 118 new 52-week highs and 91 new 52-week lows.

Economic Data

The Department of Commerce reported that the core (excluding volatile food and energy items) personal consumption expenditure (PCE) price index – the favorite inflation gauge of the Fed – increased 0.2% in October compared with 0.5% in September. The consensus estimate was 0.3%. Year over year, core PCE inflation rose 5% in October compared with 5.2% in September.

The headline PCE inflation rose 0.3% in October, in line with the previous month. Year over year, PCE inflation increased 6% in October compared with 6.3% in September.

Personal income rose 0.7% in October beating the consensus estimate of 0.4% and September’s rise of 0.4%. Personal spending increased 0.8% in October, in line with the consensus estimate. The metric increased 0.6% in the previous month. Personal savings rate dropped to 2.3% in October. September’s data was revised downward to 2.4% from 3.1% reported earlier.

The Department of Labor reported that weekly jobless claims dropped by 16,000 to 225,000 for the week ending Nov 26. The consensus estimate was 237,000. Previous week’s data was revised upward to 241,000 from 240,000 reported earlier. Continuing claims (those who already received government grants and reported one week back) increased 57,000 to 1.608 million for the week ending Nov 19.

The Institute of Supply Management (ISM) reported that manufacturing activities contracted in November, marking the first contraction in 30 months. The index for November fell to 49% compared with 50.2% in September. The consensus estimate was 49.7%. Any reading below 50% indicates contraction in manufacturing activities.

The two key sub-indexes – the new orders index and the production index – contracted in November. The sub-index for employment also entered into contraction territory. ISM manufacturing data is viewed as a barometer to gauge the health of the economy.

Construction spending in October decreased 0.3% compared with the consensus estimate of a decline of 0.2%. September’s data was revised downward to a gain of 0.1% from a rise of 0.2% reported earlier. [5]

Sources: [1][3] Stockcharts.com; [2] morningstar.com [4] Stocks fall on hotter-than-expected November jobs report (cnbc.com); [5] Zacks Professional Services, “Today’s Key Market and Economic News” for Friday December 2, 2022.