U.S. stocks clawed back from a sharp drop seen for most of the session, finishing mixed on the heels yesterday’s closure to honor President George H.W. Bush. Comments from the head of the IMF suggesting global growth fears are overblown and more headlines suggesting the Fed may be getting more dovish helped stocks fight back from trade concerns that led a global market selloff. The trade uneasiness was exacerbated by the arrest of Chinese telecom company Huawei’s CFO in Canada that appeared to add another layer of uncertainty regarding a permanent trade deal between the U.S. and China. Crude oil prices saw heavy pressure amid concerns that OPEC crude oil cuts may be less than expected. Treasury yields and the U.S. dollar moved lower, while gold was little changed, with a mixed bag of economic data appearing to take a back seat ahead of tomorrow’s key nonfarm payroll report.
The Dow Jones Industrial Average (DJIA) decreased 79 points (0.3%) to 24,948 and the S&P 500 Index dipped 4 points (0.2%) to 2,696, while the NASDAQ Composite rose 30 points (0.4%) to 7,188. In heavy volume, 1.3 billion shares were traded on the NYSE and 2.8 billion shares changed hands on the NASDAQ. WTI crude oil declined $1.40 to $51.49 per barrel and wholesale gasoline was $0.01 lower at $1.44 per gallon. Elsewhere, the Bloomberg gold spot price ticked $0.67 higher to $1,237.96 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.3% lower at 96.76.
Trade concerns that have contributed to the two-day drop in the markets were exacerbated by Huawei Technologies Co. Ltd’s Chief Financial Officer’s(CFO) arrest by Canadian authorities on Wednesday in Vancouver, where she faces extradition to the U.S. Huawei is China’s largest smartphone and communications equipment maker and the arrest was reportedly related an alleged violation of U.S. sanctions on Iran.
The November Institute for Supply Management (ISM) non-Manufacturing Index unexpectedly improved to 60.7 from October’s 60.3 level, and versus the Bloomberg forecast of a dip to 59.0. A reading above 50 denotes expansion. This was the third-straight month north of 60 as new orders and business activity grew at faster rates, though employment growth decelerated and price growth increased. Non-manufacturing activity accounts for a large majority of U.S. economic output and the ISM said respondents remain positive about current business conditions and the direction of the economy, but concerns persist about employment resources and the impact of tariffs.
The ADP Employment Change Report showed private sector payrolls rose by 179,000 jobs in November, below the forecast of a 195,000 gain, while October’s increase of 227,000 jobs was revised to a 225,000 rise. Today’s ADP data, which does not include government hiring and firing, comes ahead of Friday’s broader November nonfarm payroll report, expected to show job growth of 198,000 for both headline and private sector employment.
The trade balance showed that the deficit widened slightly more than expected to $55.5 billion in October, from September’s upwardly-revised $54.6 billion shortfall. Exports dipped 0.1% m/m to $211.0 billion, while imports nudged 0.2% higher to $266.5 billion.
Final Q3 nonfarm productivity was revised to a 2.3% quarter-over-quarter increase on an annualized basis, from the preliminary report’s 2.2% rise, matching estimates. Q2 productivity was unrevised at a 3.0% gain. Unit labor costs were adjusted to a 0.9% gain, from the initial 1.2% rise, versus expectations of a 1.0% increase. Q2 labor costs were revised to a 2.8% decrease, from the initial 1.0% drop.
Weekly initial jobless claims decreased by 4,000 to 231,000, versus expectations calling for a decline to 225,000, with the prior week’s figure upwardly revised at 235,000. The four-week moving average increased by 4,250 to 228,000, while continuing claims declined by 74,000 to 1,631,000, south of estimates of 1,690,000.
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