Michael Reinking:
Hello, I'm Michael Reinking, Senior Market Strategist at the New York Stock Exchange, and this is Market Storylines. Welcome back and hopefully you had a good Thanksgiving and enjoyed some time with friends and family. Now every week we are here to keep you up to date on the key trends and events driving global markets. We are recording on Thursday afternoon, so let's get to this week's Market Storylines.
We are now in the final homestretch to the end of the year. The month of November is officially in the books and the S&P 500 closed up nearly 6%, the best month of 2024, bringing year-to-date gains to over 25%. Now, those gains came as the election overhang was removed with broad-based participation. Now, financials and industrials led to the upside while small and mid-cap indices were up around 10% post-election and are now up about 20% year-to-date. Now, it's been a reasonably quiet start to the month of December as markets have been digesting some of those recent gains and we are witnessing some ebb and flow in the rotational activity as pockets of the market that have outperformed recently have pulled back modestly while mega-cap tech stocks have been strong this week masking some of the weakness beneath the surface.
Now this was driven by a round of positive tech earnings with management teams continuing to point to strong AI-related demand. Now, given the time of year, retail has also been a focal point and early indications suggest that the holiday shopping season is off to a solid start. Now this week there's been some focus on economic data. The ISM surveys were mixed with some improvement in the manufacturing, but the services survey came in below expectations driven by a decline in new orders and inventories, which pushed treasury yields lower on Wednesday. I thought it was particularly interesting to see the inventory declines, which doesn't foot with some of the narrative of a pull-forward of demand with potential tariff increases forthcoming. I'd also highlight that the trade deficit with China fell around $4 billion to about $28 billion in the month of October, though this was before the outcome of the election was known.
Now, labor market data is the highlight of the week, and the biggest piece of that data is still ahead of us with the BLS employment report on Friday. Now, the data we have seen thus far has been mixed with an increase in the JOLTS jobs openings, but a slightly weaker than expected ADP survey and an increase in initial claims to 224,000. And the most closely watched portion of the ADP jobs survey is the pay data, and it showed the first acceleration in pay for job stayers in over two years. Now, economists are looking for a jump in Friday's non-farm payrolls to around 200,000 with the unemployment rate to hold steady at about 4.1% after a week storm impacted report in October. Now this report in next week's CPI data will be the last key pieces of economic data before the Fed's meeting later this month.
Now after the pay data within the ADP survey, there will be some additional focus tomorrow on wages, but Fed officials have consistently downplayed the labor market as an upside risk to inflation. Now, this week's data does continue to point to a moderation in economic activity and the labor market, but from a solid base. Now we have heard from multiple Fed officials during the week, including Fed Chair Powell as a whole. I'd say this week's commentary has leaned slightly dovish. Officials have not committed to a rate cut in December, but it feels like the bar is pretty high for them not to cut, meaning it would take a very strong jobs report and a hot CPI report for them to pause. Now that being said, it could be a hawkish cut with Chair Powell suggesting that there could be a pause forthcoming and an upward adjustment to the summary of economic projections.
Now, this is a message Fed officials have started to deliver over the last couple of weeks and markets had already been moving in that direction. As we look forward to next week, it's all about inflation data and central bank commentary. Now, Fed officials will be in their media blackout window, but there are rate decisions from multiple major central banks including the ECB. Another potential catalyst is China's Central Economic Work Conference, which begins on Wednesday. Officials are expected to lay out economic targets and plans for additional stimulus in 2025. Now, I'd like to quickly shift gears to close out today. We are in the heart of holiday season, and as you can see behind me, it is a festive day here at the New York Stock Exchange as we have our hundred first annual tree lighting this evening.
Now, on behalf of the NYSE, I'd like to say a special thank you to all the companies and local business partners who helped to put this event together and to the over 450 listed companies and their 9 million employees who took part in our global giving campaign to raise awareness for CHOP, for charitable organizations supported by the NYSE community. Now, that's going to do it for this week. Once again, thank you for spending some time with us today. Remember, you can watch Market Storylines on tv.nyse.com or our YouTube channel, or you can listen every Friday on the Inside the ICE House podcast feed. Thanks for joining me. I'm Michael Reinking. I'll talk to you again next week.
Speaker 2:
That's our conversation for this week. Remember to rate, review and subscribe wherever you listen and follow us on X at ICE House Podcast. From the New York Stock Exchange, we'll talk to you again next week, Inside the ICE House.
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