The S&P 500 rose to fresh records on Friday after November jobs data came in, but not so hot as to deter the Federal Reserve from cutting rates again later this month. The broad market index climbed 0.25% to 6,090.27, while the tech-heavy Nasdaq advanced 0.81% to 19,859.77, both closing at new all-time highs. The Dow Jones Industrial Average slipped 123.19 points, or 0.28%, to close at 44,642.52.
For the third straight week, the S&P 500 and Nasdaq ended positively, rising 0.96% and 3.34%, respectively. The Dow Jones, however, experienced a 0.6% decline over the period. The November labor report showed that nonfarm payrolls increased by 227,000 last month, surpassing the Dow Jones estimate of 214,000 and significantly up from October’s upwardly revised gain of 36,000.
The unemployment rate edged up to 4.2%, as anticipated. Following this moderate unemployment data, Fed funds futures trading reflected an 85% likelihood of another rate cut in two weeks, according to the CME Group. You’re seeing a labor market that is not weak but is definitely softening, and that is more than anything else what is giving traders more confidence in the 25 basis-point rate cut here at the upcoming meeting,” said Luke O’Neill, portfolio manager at Catalyst Funds.
Despite no immediate urgency to lower rates, Federal Reserve Chair Jerome Powell indicated that the continued strength of the U.S. economy provides sufficient justification for a measured approach to monetary policy adjustments. Bank of America reported a significant shift towards online shopping during this year’s Black Friday season. According to economist Aditya Bhave, online retail spending was up 7.9% in the week ending November 30 compared to the same period last year.
However, brick-and-mortar retail experienced a slight decline of 0.3%, although nearly every spending category saw gains. The economist noted that this shift could be partially attributed to Thanksgiving falling five days later in 2024 compared to 2023, leading to a more condensed holiday shopping season.
US jobs data pushes markets
Bank of America’s December consumer survey revealed that expectations for new vehicle purchases remained high, with 43% of respondents planning to buy a car within the next 12 months, up from 41% last year. The survey, which polls around 1,000 U.S. respondents on monthly spending intentions, also indicated a slight increase in plans to purchase new appliances, while intentions to buy a new home decreased to 19% in December from 21% last month. HSBC forecasts more gains for the S&P 500 in 2025, projecting the index to reach 6,700 by the end of next year—a more than 10% increase from Thursday’s close.
Analyst Nicole Inui attributed the anticipated gains to earnings growth, as valuations are currently stretched. The firm expects earnings to grow by 9%, driven by a resilient U.S. economy and some margin expansion. Furthermore, Inui predicted that easing inflation will allow the Federal Reserve to cut interest rates by another 125 basis points next year.
The video game sector continued its impressive performance, with ESPO pacing for a record 14th straight positive session and a new all-time high close. The index has surged 30% over the past three months, compared to a 17% gain for the broader market. Notable performers within the sector included stocks such as APP, which has seen a significant rise this year.
The South Korean won weakened 0.6% against the dollar on Friday, trading at 1,423.97. The decline came ahead of the National Assembly’s vote on whether to impeach President Yoon Suk Yeol following his brief emergency martial law declaration earlier this week. Despite the quick reversal of the decree, the won has fallen 2% versus the dollar week-to-date.
Despite uncertainties, UBS has advised investors to maintain a constructive stance on global equities in the future. The firm suggested that potential positive outcomes outweigh the risks, driven by expectations of economic resilience and continued monetary support.
