The S&P 500 Index extended gains for a third week, after a stronger-than-expected November jobs report on Friday provided relief to a host of uncertainties and struggles the markets experienced earlier in the week. Labor Department officials said the economy created 228,000 new jobs last month, topping economists’ consensus forecast for 195,000. The headline unemployment rate held steady at a 17-year low of 4.1%, while wage growth remained tepid, rising just 0.2% in November and up 2.5% year-over-year. Overall jobs data helped steepen the Treasury yield curve, led by a pick-up in long-end yields, and thus provided a positive sign for economic growth. Investor sentiment also brightened after U.K. and European Union officials struck a deal to unlock further Brexit talks and the U.S. Congress approved a two-week stop-gap spending measure to avert a government shutdown.
For the week, the S&P 500 gained +0.39%, the Dow Industrials rose +0.40% and, the MSCI EAFE (developed international) increased +0.09%.
December Rate Hike Widely Expected -- Market Watch
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The ISM Non-Manufacturing Index is based on surveys of over 350 non-manufacturing (service-based) firms in 17 industries representing over 80% of the U.S. economy, as reported by the Institute of Supply Management. The survey shows the percentage of managers reporting higher activity, lower activity, or no change in the following areas: business activity, new orders, employment, supplier deliveries, backlog of orders, new export orders, inventory change, inventory sentiment, imports, and prices. Index readings above 50% indicate the non-manufacturing sector economy is generally expanding, while readings below 50% indicate the non-manufacturing sector is generally contracting.
The ISM Non-Manufacturing Index reached a 12-year high in October at 60.1, but declined for November to a 57.4 reading. Despite coming in below expectations last month, the index has expanded for the 95th consecutive month, is still well above its 12-month average and is consistent with strong numbers we saw over the summer months. Even after the decline, the current 57.4 reading has been exceeded only 19% of the time over the last 20 years, and we believe that the strength in this metric is still indicative of continued economic growth.
Some materials are chosen by the Cetera Investment Management team and summarized by Jason Vitucci who is not affiliated or registered with Cetera. Cetera Investment Management provides investment management and advisory services to a number of programs sponsored by First Allied Securities and First Allied Advisory Services. Cetera Investment Management individuals who provide investment management services are not associated persons with any broker-dealer. International investing involves additional risk, including currency fluctuations, political or economic conditions affecting the foreign country, and differences in accounting standards and foreign regulations. These risks are magnified in emerging markets. Investing in companies involved in one specified sector may be more risky and volatile than an investment with greater diversification.