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DOW – 12 = 17,900
SPX – 2 = 2071
NAS – 5 = 4769
10 YR YLD – .03 = 2.26%
OIL – .61 = 66.77
GOLD – 3.10 = 1207.50
SILV + .06 = 16.59
Seven of the 10 main industries in the S&P 500 declined. Energy companies slumped 0.8%, following three days of gains. Chevron (CVX) slid 1.3%, the most in the Dow, and Exxon Mobil (XOM) declined 0.6%. Crude fell 18% last month and moves of that magnitude cannot be attributed to normal markets following supply and demand. There is manipulation in the oil market, and the question is really whether it will end well.
Initial jobless claims fell 17,000 in the week ended Nov. 29 to 294,000. In the prior week, new filings hit 314,000, the first reading above 300,000 since early September. Tomorrow is the monthly jobs report and the guesstimates are calling for 230,000 new jobs added and the unemployment rate steady at 5.8%. The November jobs reports are subject to some revisions, so don't be surprised if that guesstimate is wildly off base. When the jobs report surprises to the upside, the S&P trades up two-thirds of the time, with growth sectors like industrials outperforming. When jobs miss, gold does well.
We'll dig into the report tomorrow, but some of the important bits of data we will track includes where wages are going. There have been signs in recent months of higher employment costs, and workers did get a boost in October from a slightly longer workweek, but hourly earnings haven't picked up, at least not yet. That means we'll also watch where jobs are created; in decent paying jobs like manufacturing and construction or in lower paying sectors such as restaurants and bars. Then we'll see if the jobs added in November are full-time or part-time; last month the U-6 unemployment rate, which tracks underutilized workers, dropped from 11.8% to 11.5%. And of course we'll follow the participation rate, which ticked up a bit in October, to 62.8% from 62.7% in September; that might be a sign that discouraged, long-term unemployed workers are jumping back in the labor pool.
The US House has passed a $577 billion dollar measure to fund the Defense Department. The bill passed the House today, 300-119, without any changes. The Senate probably will follow suit next week. The annual defense policy bill sets military policy and spending targets for fiscal 2015, which started Oct. 1. While laws covering many other parts of the government routinely are allowed to lapse because of disagreements or disinterest, a defense authorization has been enacted for 52 consecutive years. Next week Congress will work on a funding bill to keep the government open.
