U.S. Markets Sketched with a Playful Brush: Growth Stars, Shaky Small Caps & a Job‑Boom
Big Titans vs. Wiggly Dinosaurs
The S&P 500 and Nasdaq were in a good mood, smashing record highs. The Dow Jones, however, had a little slip‑up and edged down a smidge.
- Russell 2000 (the crowd of smaller firms) recorded back‑to‑back weekly red‑zone losses after last week’s sprint.
- Meanwhile, the Russell 1000 Growth Index did the heavy lifting, outpacing the value crowd by a whopping 5.53% – the biggest gap since March 2023.
Sector Take‑Aways
- Consumer Discretionary, IT & Comm. Services each rose over 3%.
- Energy, Utilities & Materials fluttered down the same lane (about −3%).
Jobs Are “A‑Wow”: Labor Market Glitches & Wins
At least one thing does feel great: the U.S. labor market. Months of weather‑wrecked slowdown (floods, Boeing strike) turned around when the Labor Dept. rolled out 227k new jobs in November – a bump above expectations. The unemployment number hiccuped to 4.2% and openings jumped to 7.74 million. In true “worker confidence” mode, 3.3 million Americans chose to quit voluntarily.
ADP added another 146k jobs in November, with wages skittering up 4.8% year‑over‑year.
Fed’s December High‑Voltage Meeting: A Cut or Two?
Fed Governor Waller hinted at a possible 0.25% rate cut, as long as the data keeps cruising smooth. Chair Powell said “we’ll keep the hand on the wheel,” hinting at cautious adjustments.
Treasury yields fell—a welcome breeze that lifted bond prices (and helped tax‑exempt municipals pull ahead). Corporate bonds also felt the love: half of fresh issuances were sold out.
Europe’s Showing A Solid Performance: Political Oscars & Brexit Madness
The pan‑European STOXX 600 recorded a healthy +2%. Germany’s DAX topped the scene with +3.86%, Italy’s FTSE MIB +4%, France’s CAC 40 +2.65% and the UK’s FTSE 100 nudged up by a modest +0.26%.
Cheers for the ECB’s policy shift; dampened political noise in France. The French‑German bond spread widened to 90 bp—the biggest gap since 2012, and Macron’s “government of general interest” pivot lifted appetite.
- Germany’s industry output & factory orders fell 1% & 1.5% respectively.
- Eurozone retail sales dipped 0.5% in October after a tidy 0.5% gain in September.
- ECB Chief Economist Philip Lane called for a “future‑oriented” policy tilt: decisions will weigh anticipated risks more than backward data.
Bank of England Governor Bailey said we could see up to four cuts in 2024, buoyed by falling inflation.
Japan’s Export Parade: Currency Devaluation & Stable Treasuries
The Nikkei 225 slid +2.3% and the TOPIX +1.7%. A weaker yen (to the mid‑150s) made exports cheap; profit bars roared up.
Japanese government bonds stayed steady; the 10‑year yield hovered flat at 1.06% amid uncertainty about the BoJ’s next move.
BoJ’s next meeting is on December 19. Investors’re split between a December hike or a January one—wages data and U.S. trade policy will tip the scale.
China’s Market: A Rally, Man, But Still Watchful
The Shanghai Composite rose +2.33% and the CSI 300 +1.44%. China’s leaders are set to unveil new stimulus at the Central Economic Work Conference (Dec 11).
Manufacturing PMI is still healthy: 50.3 in November, up from 50.1 in October. The Caixin/S&P Global manufacturing survey also nudged higher.
All‑hands‑on‑deck for December
- US job market is resilient; expectations for Fed cuts are stirring optimism.
- Waves of risk‑on sentiment from Japan & China; EU’s political drama is a reminder of undercurrents.
- Present mood: upbeat, hopeful, but with eyes on the Fed & global events.
