Stocks Mixed as Investors Parse Labor Data

December 11, 2023

Market Data as of Week Ending: 12/8/2023 unless noted otherwise

Equities were mixed during the week as investors sifted through labor-related economic data. Small cap stocks outperformed large cap. Year-to-date large cap trends continued with growth outperforming value. Communication services and consumer discretionary were the best-performing sectors for the week. Energy was the worst-performing sector as the price of oil continues the path lower. Foreign equities were mixed with MSCI EAFE slightly higher at 0.39%, and emerging markets were lower with MSCI Emerging Markets at -0.71%.

Yields moved lower during the week despite a modest increase Friday on the heels of the BLS labor report. Most of the movement came from the longer end of the yield curve as money market rates were unchanged. The 2yr yield was relatively flat at 4.71%, and the 10yr ended the week lower at 4.23%. The 2-10yr inversion steepened to -0.48%. Lower yields benefited duration as longer duration securities outperformed. Long-government was the best-performing size and style, returning 1.47% for the week. Short-government was the worst performing, returning -0.24% for the week. Yields for US corporates and high yield increased marginally at 5.51% and 8.41%, respectively. Mortgage rates continue to be lower, with the 30-year fixed ending the week at 7.09%.

Economic data for the week was centered around the labor market and painted the picture of an economy that is cooling but remains strong. The JOLTS survey reported that job openings of 8.733M were lower than expected and were 615k lower than September’s revised number. Hires and total separations were relatively unchanged. ADP reported that private employers added 103k jobs in November. This was in line with expectations and only slightly lower than October’s revised numbers. Initial jobless claims of 220k were also unsurprising as it was also in-line with expectations and relatively unchanged from the previous week. Non-farm payrolls increased to 199,000 in November, bringing the unemployment rate down to 3.7%. The increase in payrolls was expected as it included the return of nearly 30k autoworkers back into the workforce. November ISM services PMI registered 52.7%, a slight increase from October and indicated that the services sector continues to expand. Preliminary results of the Michigan Consumer Sentiment indicate that consumer sentiment continues to grow (+13.2%) as inflation concerns abate.

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