Weekly Update – December 6, 2019 – Stocks Mixed for the Week
Global stock markets were mixed for the week. International markets ended in the red, but U.S. stocks staged an eleventh-hour rally on the strength of the November nonfarm payrolls report. Early in the week, markets retreated and volatility advanced when President Trump announced tariffs against Brazil and Argentina, threatened tariffs against France and said a trade deal with China would be delayed. Nevertheless, upbeat jobs and consumer sentiment reports offset trade jitters.
As a result, U.S. stocks gained and government bond yields rose sharply. The ten-year U.S. Treasury yield ended up for the week at 1.84%; gold prices declined slightly. Oil prices rose on bigger than expected drawdowns of U.S. crude reserves and talk of OPEC production cuts. The U.S. dollar declined against a basket of major currencies.
U.S. nonfarm payrolls increased by 266,000 in November, the fastest pace of job growth since January and well ahead of expectations for 184,000. The unemployment rate fell to a 50-year low of 3.5% and wages gained 3.1% year-over-year. Average hourly earnings were up 0.2%, unchanged from October.
The preliminary Michigan Consumer Sentiment index rose to 99.2 for December, 2.4 points higher than last month and the fourth month of gains. The current conditions and expectations indexes both increased; inflation expectations declined.
The ISM Manufacturing index for November read 48.1 versus a 49.5 consensus and down from October’s 48.3. Firms cited global trade issues as causes of the fourth month of contraction in business activity.
Elsewhere, the final November Markit manufacturing PMI reading gained 0.4 to 52.6, versus consensus of 52.2 and an October reading of 51.3. The index hit a ten-month high led by growth in new orders, production and employment, although company optimism was at a three-month low on growing price pressures.
China’s official manufacturing PMI rose to 50.2 in November from 49.3 in October, its highest level since March. Growth in China’s services sector also quickened with the non-manufacturing PMI rising to 54.4 from 52.8 in October. Separately, Caixin manufacturing PMI improved to 51.8 from 51.7, ahead of the 51.5 consensus and its fastest pace of expansion in three years.