This past week we saw yet another green week, with the Dow up almost 0.7%, and the other three major indices up between 1.5%-3% on the week. Although we got some promising news from Fed chairman Jerome Powell in the middle of the week, any excitement was swiftly crushed by some hotter-than-expected nonfarm payroll numbers. This killed what would have likely been a very strong rally in stock prices.
Starting off the week, we heard Jerome Powell announce that we could see smaller rate hikes as soon as this month. This, of course, led traders to believe we would see a 50 bps hike in December, as opposed to what has become the customary, 75 bps. However, Friday morning’s economic data releases have led to cause for uncertainty. Two key metrics the Fed has been paying close attention to are Nonfarm Payrolls and Average Hourly Earnings. Ultimately, the Fed wants to see these numbers come down in a substantial way. However, that’s not what we are seeing.
For the month of November, 263,000 nonfarm payrolls were added, which is a huge miss, considering 200,000 was expected. Additionally, the October number was revised from 261,000 to 284,000. On top of the huge nonfarm payroll miss, average hourly earnings came in at 0.6%, which was double the expectation!
This week we have the calm before the “CPI storm”, so we won’t have many economic data releases of note. One of the most notable releases of the week will be consumer credit on Wednesday. Consumer credit has been steadily ticking up over the past couple of months, which is not a good thing, especially since interest rates are steadily creeping up.
The Q3 earnings season is beginning to cool down, however, we’ve still got some large and influential companies reporting earnings this week, such as:
12/05 – GitLab (GTLB)
12/06 – AutoZone (AZO), Toll Brothers (TOL)
12/07 – Brown Forman (BF.A & BF.B), Campbell Soup Company (CPB)
12/08 – Oracle (ORCL), Broadcom (AVGO), Costco Wholesale (COST), lululemon athletica (LULU), Chewy (CHWY), Vail Resorts (MTN), DocuSign (DOCU)
We have a broad spectrum of consumer companies reporting this week, so it’ll allow us to compare and contrast what the different management teams have to say. AZO operates in the automotive space, TOL builds high-end homes, BF.A distributes alcoholic beverages, CPB and COST operate in the grocery space, LULU sells luxury athleticwear, CHWY services the pet space, and lastly MTN is a leading ski resort company. As you can see, many of the bases are covered this week in terms of what a consumer may spend their money on!
We’ll also have companies like ORCL, AVGO, and DOCU reporting this week. AVGO will provide a much-needed update on the semiconductor space, while ORCL and DOCU will update us on how the B2B software landscape is performing.
Monitoring the market conditions this week.
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