U.S. stock indices ended a volatile week substantially lower, as fears over the Omicron variant and a possible acceleration of the FED’s taper outweighed continued growth.
Fed Chairman Powell, in testimony before Congress, warned that the Omicron variant could worsen the supply chain supply chain bottlenecks and inflation. He also admitted that inflation may not be transitory and that the FED would consider accelerating the taper of bond purchases at the December meeting.
On Friday, the Labor Department’s jobs number created confusion as the headline jobs created was surprisingly small but other data conflicted with this weakness with workforce participation increasing and unemployment dropping.
Treasury yields fell with the 30-year bond yield closing at 1.375% and the 10-Year note closing at 1.354%. Crude oil fell to $66.41 a barrel and natural gas fell to $4.092 per MMBTUs. The U.S. dollar index rose to 96.16 and gold fell to $1784.20 an ounce.
In the economic numbers:
- IHS Markit released its November purchasing manager indices. Keep in mind that everything over 50 represents expansion and under 50 represents contraction.
- U.S. manufacturing PMI fell from 58.4 in October to 58.3 in November.
- US services PMI fell from 58.7 to 57.0.
- China manufacturing PMI fell from 50.6 to 49.9.
- China services PMI fell from 53.8 to 52.1.
- Japan manufacturing PMI rose from 53.2 to 54.5.
- Japan services PMI rose from 50.7 to 53.0.
- Eurozone manufacturing PMI rose from 58.3 to 58.4.
- Eurozone composite PMI rose from 54.2 to 55.4.
- Mexico manufacturing rose from 49.3 to 49.4.
- The S&P CoreLogic Case-Shiller National Home Price Index was 19.5% year over year in September. This was a decrease from the 19.8% year over year gain in August.
- The Labor Department reported:
- The U.S. added 210,000 jobs in November while October’s number was revised up to 546,000.
- First time claims for unemployment rose to 222,000 from a revised 192,000 in the prior week.
- The 4-week moving average of claims, designed to smooth out volatility, fell to 238,750.
- Continuing claims remained about 2.1MM the week ending November 20th.
- A broader measure of claims including extended benefits, pandemic assistance and other programs was 2.3MM in the week ended November 13th.
- For the full unemployment report go here: https://www.dol.gov/ui/data.pdf .
- The EIA weekly oil report is here: http://ir.eia.gov/wpsr/wpsrsummary.pdf . Also, the EIA reported in the prior week:
- Field production of crude oil rose from 11.5MM to 11.6MM BPD.
- Natural gas storage fell 59BN cubic feet and is below the 5-year average at this time of year.
- Baker Hughes reported the number of active oil rigs was unchanged at 467. The number of active natural gas rigs was unchanged at 102.
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Loren C. Rex, CFP®, MA Erik A Smith, AIF®
Founder / Emeritus President & C.E.O.
Registered Representative of and securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Generations Financial Planning & Wealth Management are separate companies and are not affiliated.
These are the opinions of Loren Rex and Erik Smith and are not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. The Indices mentioned are unmanaged and cannot be invested into directly.