I expect the Big Event of the week to be Friday morning’s report of the November jobs numbers.
The Dow Jones Industrial Average rose more than 2% last week. The Nasdaq Composite and the Standard & Poor’s 500 rose more than 1%. Both the S&P 500 and Dow Jones ended November at all-time highs.
A ”good” jobs report, which is likely in my opinion, will keep the records coming for at least another week–until the usual Fed meeting jitters set in on the run up to the central bank’s meeting on December 18.
What would a good report look like? It would show a strong rebound from October’s shockingly low number of new jobs. And at the same time it would show that the labor market continues to cool, maybe by showing a slight uptick in the unemployment rate. Impossible to get both, you say! No, not when you remember that the figure on jobs and the figure on the unemployment rate come from two different surveys that can move in seemingly contradictory directions.
Economists expect that the November report will show that the U.S. economy labor added 200,000 jobs in the month, up from the 12,000 monthly job additions in October. And that the unemployment rate will inch up is expected to 4.2% from 4.1%.
As of Friday, markets were pricing in a 66% chance that the Fed cuts rates at its final meeting of the year on Dec. 18, according to the CME FedWatch Tool. Further out, markets are pricing in two more rate cuts over the next year. I think that the market will be disappointed in 2025 because the Fed will cut only once, and maybe not at all as it tries to forecast what President-elect Donald Trump’s tax cuts and tariffs will do to growth and inflation.
