Employers added 228,000 jobs in November, 221,000 of them in the private sector. Both are nicely above their averages over the last six months, 164,000 headline and 162,000 private. Almost all the major sectors and subsectors were positive. Mining and logging was up 7,000 (slightly above the average for the last year); construction, 24,000 (well above average, with specialty trades strong and civil/heavy down); manufacturing 31,000 (well above average, with almost all of it from durables); wholesale trade, 3,000 (slightly below average); retail, 19,000 (vs. an average loss of 2,000); transportation and warehousing, 11,000 (well above average); finance, 8,000 (weaker than average); professional and business services, 46,000 (right on its average, with temp firms particularly strong); education and health, 54,000 (well above average, with education, health care, and social assistance all participating); and leisure and hospitality, 14,000 (well below average). The only major down sector was information, off 4,000, slightly less negative than average. Government added 7,000, well above average, with local leading the way. A very nice report indeed. The markets reacted favorably with the report on Friday.
Since 1967, a high consumer confidence reading correlates with negative returns for the S&P 500. At current levels, history suggests negative returns on average over 1, 2, and 3 years forward. Unconventional central bank quantitative-easing will test the correlation between high consumer confidence and S&P 500 returns.
If the S&P 500 finishes the month of December with a positive return, this will be the first time in 30-years without a single monthly decline in the S&P 500.
Market Recap S&P 500 +20.59% YTD
The S&P 500 gained 0.38% last week making a new high.
Russell 2000 +13.48% YTD
The Russell 2000 declined 0.96% for the week. The 50-day moving average is providing support for small-cap stocks.
MSCI EAFE +22.10% YTD
International developed stocks gained 0.10% for the week.
MSCI Emerging Markets +30.56% YTD
The Emerging Markets fell 0.46% for the week.
BARCLAYS AGGREGATE BOND Index +3.33%
Barclays Aggregate Bond Bonds declined 0.03% with the 10-year treasury rising to 2.38%
Barclays High Yield Bond +6.29%
High yield bonds were essentially flat with a 0.05% gain. With high-yield testing the 200-day moving average, the sector is at an inflection point. If high-yield bonds fail to penetrate the 200-day moving average, more downside should follow.
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