The stock market faced a challenging Monday and Tuesday, but the three major indexes rallied hard after Federal Reserve Chairman Jerome Powell delivered a speech at the Brookings Institution. He reiterated that the pace of rate hikes would slow in December and while there was little new information, the market took the opportunity for a volatile short-squeeze that sent the major indexes up on the day. The NASDAQ led the week with a gain of 2.09 percent. The S&P 500 rose 1.13 percent. The Dow Jones Industrial Average, which has been the stronger index this year, gained 0.24 percent. It is down 5.25 percent for the year.
Apple (AAPL) fell slightly on the week, but Netflix (NFLX) and Meta (META) gained more than 10 percent each., Other BigTech stocks saw gains ranging from 1 to 6 percent.
Volatility in the U.S. stock market fell again last week, hitting levels last seen in April and August. Both prior lows in volatility saw stock market rallies lose steam and reverse. The upcoming week will be important for short-term market direction because the major indexes are also at important technical levels. The S&P 500 Index is at the 200-day moving average. A breakout higher in stocks and break down in volatility will confirm for traders that markets will likely drift higher into year-end.
The 10-year U.S. Treasury bond yield tumbled to its lowest level since September. It settled at 3.51 percent on Friday, down from the 4.30 percent peak in October. iShares 20+ Year Treasury (TLT) gained 4.32 percent last week as weaker inflation and a more dovish-sounding Fed boost bonds.
The S&P 500 gained 5.38 percent in November. All 11 sectors were green, with materials up 11.70 percent. Financials and technology rose more than 6 percent each, industrials nearly 8 percent. Consumer discretionary was the weakest, up less than 2 percent.
Job openings in the United States fell from 10.7 million in September to 10.3 million in October. New jobs were higher than expected in November, with 263,000 new hires. Wage growth was surprisingly high at 0.6 percent, double forecasts. This high rate of wage growth briefly sent stocks sharply lower and hints at how inflation be elevated longer than anticipated.
According to the Department of Labor, weekly jobless claims dropped to 225,000 from 237,000 in the week ended November 25.
The U.S. Bureau of Economic Analysis reported personal income in the United States rose 0.7 percent in October, 0.4 percent after inflation and in line with expectations.
The upcoming week is light on domestic data. The ISM services report on Monday will highlight the early week data. Friday will bring the producer price index for November along with the University of Michigan consumer sentiment survey early read on December. Analysts expect the PPI rose 0.2 percent. China’s balance of trade and inflation readings are also out this week.
Upcoming earning reports: The large-cap earning reports are few this week. The most important will be Thursday’s report from Costco:
• Monday: Gitlab (GTLB)
• Tuesday: AutoZone (AZO)
• Wednesday: Brown-Forman (BF.B)
• Thursday: Broadcom (BRCM), Costco (COST)