Stocks finished the week with mixed results, as the Dow Jones Industrial Average (DJIA) declined by 0.6% while the three other main benchmarks set new records. The S&P 500 (SPX) rose for the third straight week, adding 0.96% and sailing past most of Wall Street’s year-end targets. With 57 records this year, the broad large-cap index is on track for its best annual return since 2019. Meanwhile, the tech benchmarks Nasdaq Composite (NDAQ) and Nasdaq-100 (NDX) regained market leadership with weekly surges of 3.34% and 3.31%, respectively.
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Data continues to point to a resilient economy and labor market, reflecting a robust backdrop for stock markets going forward. Consumption – the backbone of the U.S. economy, driving about 70% of GDP – is robust, with healthy rates of spending growth supported by positive trends in real wage gains. The consumer sentiment index touched its highest level since April, reflecting positive economic expectations among U.S. households. As inflation is expected to continue trending down, while borrowing costs are set to keep on declining thanks to the Fed’s monetary easing, consumer strength is slated to continue well into 2025.
Moreover, U.S. economic growth for 2024 is forecast to come in at a healthy clip of about 3%, while the unemployment rate remains far below its long-term average. Last Friday’s jobs report confirmed the strength of the labor market, as hiring growth strongly rebounded from October’s weakness. Although the unemployment rate ticked slightly higher last month, it remains comfortably low.
Still, the increase in unemployment to 4.2% (from 4.1% last month) was seen as a sign of a moderation in labor market strength, supporting expectations for another interest-rate cut by the Federal Reserve later this month. However, there’s still one test for the economy to clear on the way to further easing – this week’s CPI inflation report. If the inflation comes in unchanged from last month’s 3.3% annualized rate as economists expect, markets may surge once again.
Three Economic Events
Here are three economic events that could affect your portfolio this week. For a full listing of additional economic events, check out the TipRanks Economic Calendar.
» Q3 2023 Non-Farm Productivity and Unit Labor Costs – Tuesday, 12/10 – The Productivity report measures output per hour of labor. Since higher labor productivity leads to healthier business activity, i.e., higher economic growth, the report helps discern both near- and long-term GDP growth trends. The Unit Labor Costs report reflects the price of a unit of production in terms of wages and helps uncover inflationary or disinflationary pressures coming from wages.
» November’s CPI and CPI ex. Food and Energy (Core CPI) – Wednesday, 12/11 – The CPI report is one of the two key indicators used to measure inflation (the second one is the Personal Consumption Expenditures, or PCE). Policymakers, businesses, and consumers closely watch the CPI report, as it reflects the price trends in the economy, shapes consumer spending and business outlook, and directly affects the Federal Reserve’s policy rate decisions.
» November’s Producer Price Index (PPI) – Thursday, 12/12 – This report reflects input prices for producers and manufacturers. Since PPI measures the costs of producing consumer goods – directly affecting retail pricing – PPI is seen as a telling signal of inflationary pressures. This makes it a leading indicator for the following month’s CPI. Thus, the PPI directly impacts the overall inflation outlook among policymakers.
For more exclusive market insights and content from TipRanks Macro & Markets research analyst Yulia Vaiman, click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
