Mid-Week Market Minute 11.30.22

Markets Rally, Jobs Report Friday

Stock trended lower in early trading this week as global markets looked to close out a second consecutive month of positive performance. All told, the S&P 500 rallied about 2% in November, overshadowed by the strong performance of international stocks. Overseas, the MSCI ACWI ex US (international index) is set to finish the month of November better by more than 10% as European stocks were bolstered by a weaker U.S. dollar, relatively upbeat economic data, and plummeting natural gas prices.In China, stocks have been weighed down by China’s zero-COVID-policy, and investors continue to monitor signs that China may begin to ease COVID-19 restrictions amid the ongoing protests in the country.

As we look ahead to the beginning of December, all eyes are on the Federal Reserve. Fed Chair Jerome Powell is slated to speak this week, when investors will look for signals about the path of interest-rate increases. At their meeting in two weeks, the Fed is expected to deliver a smaller 0.5 percentage point rate hike after four consecutive 0.75 percentage point increases to fight high inflation. Any signal that deviates from this expectation for future rate hikes would likely lead to elevated volatility.

On the data front, Friday will bring the widely followed jobs report for October. The labor market sits at historically strong levels, however recent jobless claims reports along with this week’s ADP employment report came in weaker than expected, indicating that the labor market may be softening. Right now, the markets are expecting the report to show that the U.S. economy added 200,000 jobs in October, while the unemployment rate is expected to remain unchanged at 3.7%. Outside of the jobs report, we’ll get a look at Personal Consumption Expenditures (PCE) inflation Thursday. Recent downward pressure in oil prices, the dollar, and interest rates suggest that peak inflation is already behind us, and investors will look to Thursday’s inflation report to support that suspicion.

Source: GSAM, CNBC, JPMorgan

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