Strong Jobs Report Follows Solid Earnings Reports

Key Takeaways

• November Jobs Report Exceeds Expectations With Upward Revisions For Prior Months
• Strong Earnings Drive Premarket Gains For DocuSign, Lululemon, And Ulta
• Inflation Data And Major Earnings Highlight Upcoming Week’s Market Focus

It’s been a quiet week for stocks with little price movement and low volume. On Thursday, both the S&P 500 and Nasdaq Composite were down less than 0.2%. The Dow Jones Industrial Average fell 0.6%, but the biggest mover for the day was the Russell 2000 where small cap stocks fell over 1%. Overall volume was once again down around some of the lowest levels we’ve seen for the year. We’ll see if today’s employment report spurs activity.

The November employment report was forecast to show 202 thousand new jobs and an unemployment rate of 4.2% according to Bloomberg. The actual numbers were 227 thousand new jobs, stronger than expected and an unemployment rate of 4.2%. Leisure and hospitality jobs saw the biggest gains while a return of striking workers in transportation equipment manufacturing also accounted for a portion of jobs. In addition, we saw upward revisions for both September and October of 32 thousand and 24 thousand, respectively. Later today, the most recent Consumer Sentiment report is scheduled for release. I’m interested to see if there are a continuation of optimistic expectations which may help explain the 5% gains we’ve seen in the S&P 500 since the election. Also on today’s schedule, three members of the Fed are scheduled to speak throughout the day, and I’ll be listening for any hints as to what to expect at the next Federal Reserve Open Market Committee (FOMC) meeting later this month. Currently, according to the CME Fed Watch Tool, there is a 72% probability of a quarter-point rate cut at the meeting.

We had a few earnings releases since yesterday’s close, starting with DocuSign. The digital signature company beat forecasts and also issued upbeat forward guidance. That stock is higher by 13% in premarket trading. Lululemon also released their earnings. While the apparel maker exceeded estimates on both the top and bottom line, holiday guidance was in line with expectations. What I found most interesting about their report was the call out of slowing U.S. sales; however, international sales were strong which helped drive the better-than-expected results. Shares of Lululemon are up 9% in premarket. Also reporting overnight was Ulta Beauty. The company reported results ahead of expectations and raised its full year outlook. In premarket trading, Ulta Beauty shares are higher by 12%.

A couple other items of note, Airbus is laying off 5% or just over 2,000 people from its space and defense division as it looks to improve productivity. Lastly, crude oil prices are lower by around 1% in premarket. That comes after members of OPEC+ agreed to push back production cuts by three months. Those cuts were initially scheduled to go into effect next month.

Looking forward to next week, we’ll have a few more companies report earnings, including Oracle, before the open on Monday. Adobe is scheduled to report after Wednesday’s close and then Costco reports following the close on Thursday. We’ll also get some more data on inflation next week. On Wednesday, the Consumer Price Index is due out. That will be followed on Thursday by the Producer Price Index. I’ll have more on all of that next week.

For today, we’ve already seen futures make a slight jump following the employment report. The S&P 500 is sitting right around 6100 and while we have already briefly crossed that this week in the futures market, we haven’t yet closed above it. The Nasdaq Composite is also closing in on a milestone of 20,000. While that 20,000 number will most certainly be celebrated, I’d remind readers that there are still some concerning signs out there. Longer-term bond yields continue to remain high. While the VIX is trading at a very low number, some of the more esoteric measures of volatility are trading at all-time highs. Therefore, I would again take time as we head into the last few weeks of the trading year to take inventory of positions. As always, I would stick with your investing plans and long-term objectives.