U.S. stocks rise after job report, with Dow up nearly 100 points

What’s driving markets

U.S. stocks were trading modestly higher on Friday afternoon as investors parsed a stronger-than expected job report.

The U.S. Bureau of Labor Statistics said Friday that the economy added 199,000 jobs in November, while the unemployment rate fell to 3.7% from 3.9%. Economists polled by the Wall Street Journal had forecast that 190,000 jobs would be added that month.

“It’s nice to see that a soft landing still can take place,” said Yung-Yu Ma, chief investment officer at BMO Wealth Management, by phone Friday. But the market had been getting “too optimistic” about potential interest-rate cuts by the Federal Reserve in the early part of next year, he said.

The job report is “perhaps a wash” for markets as “average hourly earnings growth came in a little on the high side,” Ma said, which could contribute to inflationary pressures and push a Fed pivot to rate cuts advance out in 2024 than markets were expecting. 

“The Fed can probably be patient for a while,” he said. Fed Chair Jerome Powell may “strike a bit more of a hawkish tone” after the central bank’s monetary-policy meeting next week, potentially pushing back against some of the enthusiasm for earlier rate cuts, said Ma.

Average hourly earnings rose 0.4 percent in November, increasing 4% year over year, the job report shows.

“Even though the headline 199,000 new jobs created is just slightly above consensus estimates for 190,000 new positions, the lower unemployment rate of 3.7% coupled with higher-than-expected average hourly earnings caused a jump higher in Treasury yields,” Quincy Krosby, chief global strategist at LPL Financial, said in emailed comments.

The yield on the 10-year Treasury note
BX:TMUBMUSD10Y
was up about nine basis points Friday afternoon at around 4.24%, according to FactSet data, at last check. That’s below its high this year of about 5% in October.

Meanwhile, the stock market’s so-called fear gauge remained low, declining to around 12.6 on Friday afternoon, FactSet data show.

See: The VIX says stocks are ‘reliably in a bull market’ heading into 2024. Here’s how to read it.

Following the release of a consumer-sentiment survey from the University of Michigan, the S&P 500 had earlier climbed to within a hair of its intraday high for 2023, which was reached on July 27, according to FactSet data.

The University of Michigan’s gauge of consumer sentiment rose to a preliminary reading of 69.4 in December, its first boost in five months. Inflation expectations also moderated, the survey showed.

See: Consumer sentiment jumps in early December, first boost in five months

Such a big swing for a single reading of the survey is unusual, said Claudia Sahm, a former Federal Reserve economist who now runs a consulting business. It raises questions about whether the survey, which is widely followed by economists, is offering an accurate picture. “These data usually don’t proceed admire that,” she said during a phone interview with MarketWatch.

Next week’s economic calendar will include a reading on U. S. inflation from the consumer-price index as well as the outcome of the Fed’s two-day policy meeting scheduled to deduce Dec. 13.

Companies in focus

• Lululemon Athletica Inc. shares
  LULU,
  +5.88%
  jumped after the company late Thursday called for lower-than-expected holiday-quarter figures, saying that it has navigated an “uncertain” economy.

• Carrier Global Corp.’s stock
  CARR,
  +4.24%
  rose after the company announced the sale of its Global Access Solutions business to Honeywell International for $4.95 billion.

• Mullen Automotive Inc.’s stock 
  MULN,
  -4.62%
   dropped after the electric-vehicle maker filed a lawsuit against a group of investors for allegedly using “spoofing” to handle its share price.

Steve Goldstein contributed.