From a macro standpoint, today has produced a lot to chew on, and thus far, the stock market isn't choking on any of it. On the contrary, the news has gone down smoothly, leading to a positive bias in the futures trade.
The S&P futures are up eight points, the Nasdaq 100 futures are up 37 points, and the Dow Jones Industrial Average futures are up 58 points.
Some of the macro developments garnering attribution for the positive bias include the following:
- Congress agreed to a stop-gap measure that will extend government funding for two weeks, thereby averting a shutdown tonight. This qualifies as a positive development only because it avoided a negative. It's a stretch to say the market has been moved by this development, though, because it never really traded down in fear of a shutdown happening.
- The EU and UK reached an agreement on key provisions related to the Brexit process and will now move on to a discussion of trade matters.
- China reported stronger-than-expected export and import activity for November, which will lend to a positive Q4 global growth narrative
- Japan reported a 2.5% quarter-over-quarter annualized increase in Q3 GDP, up from 1.4% in a preliminary estimate
The aforementioned items were all known ahead of the release of the November Employment Situation report, which didn't alter the market's positive mood because it was basically more of the same with respect to labor market activity. Job growth is strong but wage growth isn't.
The key takeaway from the report is that wage growth remains subdued. That isn't likely to keep the Fed from raising rates at this month's meeting, yet it could give the Fed a data-based reason to move more slowly on the next rate hike in 2018.
The notable headlines from the Employment Situation Report are as follows:
- November nonfarm payrolls increased by 228,000 (Briefing.com consensus 190,000). Over the past three months, job gains have averaged 170,000 per month.
- October nonfarm payrolls revised to 244,000 from 261,000
- September nonfarm payrolls revised to 38,000 from 18,000
- November private sector payrolls increased by 221,000 (Briefing.com consensus 170,000)
- October private sector payrolls revised to 247,000 from 252,000
- September private sector payrolls revised to 50,000 from 15,000
- November unemployment rate was 4.1% (Briefing.com consensus 4.1%) versus 4.1% in October
- Persons unemployed for 27 weeks or more accounted for 23.8% of the unemployed versus 24.8% in October
- The U6 unemployment rate, which accounts for both unemployed and underemployed workers, was 8.0% versus 7.9% in October
- November average hourly earnings were up 0.2% (Briefing.com consensus 0.3%) after declining a revised 0.1% (from 0.0%) in October
- Over the last 12 months, average hourly earnings have risen 2.5%, versus 2.3% for the 12 months ending in October
- The average workweek in November was 34.5 hours (Briefing.com consensus 34.4), versus 34.4 hours in October
- November manufacturing workweek was unchanged at 40.9 hours
- Factory overtime was unchanged at 3.5 hours
- The labor force participation rate was 62.7% in November, unchanged from October
The Wholesale Inventories report for October and the University of Michigan's preliminary consumer sentiment report for December will be released at 10:00 a.m. ET. Neither report will be a market mover of note given that neither comes close to measuring up to the importance of the Employment Situation report.
The latter has helped cement expectations for a positive start for the stock market. With ample reason in the macro news to hold the opening gains, traders will now be interested to see if the major indices can indeed do just that.