The Devil Was in the Details

By Connor Smith |  Friday, December 3 Good News Is Bad News...for Stocks. U.S. stocks fell on Friday—but only after traders found positive signs in a disappointing jobs report. You read that right. The S&P 500 index initially opened higher but benchmark index closed down 0.8%, extending its weekly skid to a second consecutive week. The Nasdaq Composite fell 1.9% and is off 6% from its Nov. 19 record high. The Dow Jones Industrial Average fared the best of the big three, closing down 0.2%. But unlike the others, the Dow is down for four-straight weeks. The U.S. added 210,000 jobs for the month of November, well short of the 535,000 economists polled by FactSet were expecting. Initially, that disappointing number actually seemed like good news for stocks, Barron's reporters Jacob Sonenshine and Jack Denton write: “Tapering” means the Fed is gradually lowering the amount in bonds it is buying per month to zero. Fed Chair Jerome Powell had said recently that the central bank will watch the incoming economic data to decide if it will increase the pace of tapering.  At first glance, this jobs report makes that faster tapering look less likely. That would also mean the Fed would be likely to be slightly more patient with interest rate hikes, which making markets less afraid of a notable slowdown in economic growth. But that wasn’t the story in the market Friday, as signs of underlying strength in the labor market emerged. While the headline figure came in below expectations, labor force participation rose to 61.8% from 61.6%. That's the first time the figure has broken above 61.7% since pandemic lockdowns began to unwind, notes Barron's Lisa Beilfuss. Friday’s data gives some reason for optimism over inflation pressures that have been building since the economy began to recover from last year’s shutdowns. Participation remains low, but November is the first sign of movement in the right direction. The data is the last major reading on employment before the Fed meets Dec. 14-15, when it is expected to debate whether to speed up the pace of monthly reductions to its emergency bond-buying program.  November’s jobs report probably doesn’t change the Fed’s calculus. But it may give investors some relief, as expectations have been building for more aggressive monetary policy tightening at a time when uncertainty about Covid-19 is rising anew. The Omicron variant continues to create fears about economic growth, depressing the 10-year Treasury yield, which continued to fall today. It was down 10 basis points to 1.342%, the lowest level since late September.  Watch our TV show on Fox Business Fridays at 9 p.m. or 10:30 p.m. ET; Saturdays at 11 a.m.; or Sundays at 10 a.m. or 11:30 a.m. ET. This week, see an interview with Ray Dalio, founder of Bridgewater Associates. Plus, more on how buyers and sellers can navigate the hot housing market.

 

DJIA: -0.17% to 34,580.08 S&P 500: -0.84% to 4,538.43 Nasdaq: -1.92% to 15,085.47 The Hot Stock: ViacomCBS +5.1% The Biggest Loser: Adobe -8.2% Best Sector: Consumer Staples +1.2% Worst Sector: Consumer Discretionary -1.9%