Market Update – December 9th, 2024

Financial Markets

It was a positive week for stocks, with the S&P 500 and Nasdaq Composite reaching new all-time highs, supported by strong employment numbers later in the week. As of Friday, December 6, the Nasdaq Composite surged 3.34%, followed by the S&P 500, which rose 0.96%. The Dow Jones Industrial Average saw a slight decline of -0.6%, while the Barclays Aggregate Bond Index was nearly flat, up just 0.07%.

Source: Zacks

Market News

November Employment Report

In November, the U.S. economy added 227,000 jobs, surpassing expectations and rebounding from October’s disruptions caused by hurricanes and union strikes. The unemployment rate rose slightly to 4.2%, in line with forecasts. Average hourly earnings increased by 0.4% for the month and 4% year-over-year, suggesting real wage growth.

Job gains were concentrated in health care (+54,000), leisure and hospitality (+53,000), and government (+33,000). This month’s robust jobs report has raised market probabilities for a potential rate cut at the Federal Reserve’s upcoming meeting on December 18th.

Source: Bureau of Labor Statistics

ADP Private Payrolls

The ADP employment report, another key gauge of labor market conditions, showed that private employers added 146,000 jobs in November, slightly below expectations. Large employers drove much of the month’s growth, though industry performance was mixed. Manufacturing posted its weakest numbers since spring, while financial services and leisure and hospitality also saw softer hiring. Year-over-year pay gains improved, with job-stayers seeing an average annual wage increase of 4.8% and job-changers experiencing a 7.2% increase.

ISM Manufacturing

The ISM Manufacturing Index rose to 48.4% in November, a slight improvement from October and the highest reading since June. While this marks improvement, the reading remains below the 50% threshold, indicating contraction in the manufacturing sector for the eighth consecutive month and the 24th time in the last 25 months.

The ISM noted that demand remains weak as companies finalize 2025 plans, benefiting from the resolution of election-related uncertainties. Production execution eased in November, reflecting sluggish demand and weak backlogs. They also noted in the report that although suppliers have capacity, with improving lead times, some product shortages have re-emerged.

Source: Institute for Supply Management

ISM Services

In contrast to the manufacturing sector, the ISM Services Index signaled continued economic expansion in the services sector for the fifth consecutive month in November. The Services PMI registered 52.1%, indicating growth for the 51st time in the last 54 months since the recovery from the pandemic-induced recession began in June 2020. Although this was a slight decline from October, it still reflects positive momentum in the services sector.

The decrease in the Services PMI in November was driven by declines across all four subindexes directly impacting the measure—Business Activity, New Orders, Employment, and Supplier Deliveries. However, 14 industries reported growth in business activity, and 13 indicated expansion in new orders, both showing improvement compared to October. These figures support the view that the services sector has returned to a period of sustained, more normalized growth.

Source: Institute for Supply Management

Consumer Sentiment

Consumer sentiment improved for the fifth consecutive month in December, climbing about 3% to reach its highest level in seven months and slightly surpassing expectations. A notable driver of this improvement was a surge in buying conditions for durable goods, which propelled the Current Economic Conditions index more than 20% higher in the month. The University of Michigan notes that this surge was less a reflection of economic strength and more a response to consumer perceptions that purchasing now could help avoid future price increases associated with proposed tariffs of the incoming Trump administration.

At the same time, the Expectations Index revealed a growing political divide, with optimism rising among Republicans but declining among Democrats as post-election recalibration continued. Year-ahead inflation expectations also edged higher to 2.9%, marking a six-month peak while remaining within the pre-pandemic range of 2.3-3.0%.

Source: University of Michigan

Summary

Stocks had a strong week, with the S&P 500 and Nasdaq Composite reaching new all-time highs, driven by a November employment report that exceeded expectations. The U.S. economy added 227,000 jobs in November, and the unemployment rate rose slightly to 4.2%. Meanwhile, the ISM Manufacturing Index signaled ongoing contraction, while the ISM Services Index showed continued growth in the services sector. Consumer sentiment rose for the fifth consecutive month, driven by stronger buying conditions for durable goods, though political divides and rising inflation expectations remained on consumers’ minds.

We appreciate your continued trust.

Thank you,

Joseph M. Maas,
CFA, CFP®, ChFC, CLU®, MSFS, CCIM, CVA, ABAR, CM&AA

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