Stocks Extend Record-Breaking Run After Jobs Data: Markets Wrap

The rise in the unemployment rate should give the Fed opportunity to cut in December, but if they do, the Fed will likely pause in January unless inflation stats decelerate meaningfully, according to Jeffrey Roach at LPL Financial.

Recent data has signaled a possible stall in inflation’s descent toward the Fed’s 2% target, raising the stakes for next week’s Consumer Price Index. The figures are expected to show core inflation, which excludes the volatile categories of food and energy, remained stubborn in November, according to economists surveyed by Bloomberg.

“U-rate gives no cause for a pause,” said Michael Feroli at JPMorgan Chase & Co. “While there is still another CPI report next week, we think it would need to be a very large surprise to change the Committee’s thinking.”

Fed Bank of Chicago President Austan Goolsbee said the labor market appears largely stable despite a bumpy series of data. His Cleveland counterpart Beth Hammack noted policymakers are “at or near” the point where the central bank should slow the pace of rate reductions.

Separate data showed US consumer sentiment hit the highest since April, while year-ahead inflation expectations picked up.

“Given the positive backdrop of strong economic growth, a healthy labor market, and inflation that is relatively contained, the Fed can keep cutting rates and that should allow the bull market to run into the end of the year and into early next year, noted Chris Zaccarelli at Northlight Asset Management.

Continued and broadening profit growth and a strong economy can keep driving US equities higher in 2025 despite lofty valuations after two banner years for the S&P 500, according to strategists at HSBC Holdings Plc led by Nicole Inui.

The firm set a target for US equity benchmark at 6,700 for next year.

“Consecutive years of double-digit returns is not unusual especially in times with steady macro conditions,” she wrote.

A powerful rally in US stocks as well as cryptocurrencies has left the asset classes looking frothy, according to Bank of America Corp.’s Michael Hartnett.

BofA’s Hartnett said there’s a high risk of “overshoot” in early 2025 if the S&P 500 nears 6,666. The bank’s bull-and-bear indicator shows no sign yet of exuberance among global investors.

Corporate Highlights:

• Federal Trade Commission Chair Lina Khan and Assistant Attorney General Jonathan Kanter should look into allegations around FanDuel Inc. and DraftKings Inc.’s conduct related to competition, senators say, according to a letter posted on X.

• Lululemon Athletica Inc. posted its biggest one-day gain since 2018 on optimism the upscale activewear brand is overcoming competition and cautious consumers

• DocuSign Inc., a maker of electronic-signature software, boosted its revenue forecast for the full year. Analysts were positive about the early contract renewals.

• Victoria’s Secret & Co. raised its outlook after reporting third-quarter sales that topped Wall Street expectations, saying shoppers had an early positive response to its holiday merchandise.

• Aviva Plc reached a preliminary agreement to buy Direct Line Insurance Group Plc for £3.6 billion ($4.6 billion) in a deal that would create the UK’s largest motor insurer.

Some of the main moves in markets:

Stocks

• The S&P 500 rose 0.2% as of 4 p.m. New York time

• The Nasdaq 100 rose 0.9%

• The Dow Jones Industrial Average fell 0.3%

• The MSCI World Index rose 0.2%

Currencies

• The Bloomberg Dollar Spot Index rose 0.2%

• The euro fell 0.2% to $1.0564

• The British pound fell 0.2% to $1.2739

• The Japanese yen was little changed at 149.96 per dollar

Cryptocurrencies

• Bitcoin rose 2.6% to $101,607.32

• Ether rose 5% to $4,054.23

Bonds

• The yield on 10-year Treasuries declined three basis points to 4.15%

• Germany’s 10-year yield was little changed at 2.11%

• Britain’s 10-year yield was little changed at 4.28%

Commodities

This story was produced with the assistance of Bloomberg Automation.

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