U.S. stocks extended a sharp weekly decline back to correction territory, giving up last week’s rally, with mixed commentary from the Trump administration exacerbating trade worries, while a softer-than-expected labor report appeared to agitate growing global growth concerns. Treasury yields and the U.S. dollar saw some pressure, while gold was higher and crude oil prices added to a weekly recovery following a larger-than-expected production cut announced by OPEC and allies.
The Dow Jones Industrial Average (DJIA) fell 559 points (2.2%) to 24,389, the S&P 500 Index dropped 63 points (2.3%) to 2,633, and the NASDAQ Composite tumbled 219 points (3.1%) to 6,969. In heavy volume, 1.0 billion shares were traded on the NYSE and 2.4 billion shares changed hands on the NASDAQ. WTI crude oil rose $1.12 to $52.61 per barrel and wholesale gasoline was up $0.06 at $1.49 per gallon. Elsewhere, the Bloomberg gold spot price gained $10.59 to $1,248.37 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—declined 0.2% to 96.63. Markets were solidly lower for the week, as the DJIA fell 4.4%, the S&P 500 Index dropped 4.6%, and the NASDAQ Composite tumbled 4.9%.
Nonfarm payrolls rose by 155,000 jobs month-over-month (m/m) in November, compared to the Bloomberg forecast of a 198,000 increase, and the rise of 250,000 seen in October was revised downward to a gain of 237,000 jobs. Excluding government hiring and firing, private sector payrolls increased by 161,000, versus the forecasted gain of 198,000, after rising by an upwardly revised 251,000 in October.
The unemployment rate remained at 3.7%, matching estimates, while average hourly earnings were up 0.2% m/m, slightly below projections of a 0.3% gain but above September’s downwardly revised 0.1% rise. Y/Y, wage gains were 3.1% higher, matching estimates and October’s rise. Finally, average weekly hours were 34.4, down slightly from October’s unrevised 34.5 rate, where it was expected to remain.
The December preliminary University of Michigan Consumer Sentiment Index was unchanged from November’s final read at 97.5, and compared to expectations for a dip to 97.0. A decline in consumer expectations component of the survey countered a rise in the current economic conditions portion. The 1-year inflation forecast ticked lower to 2.7% from 2.8%, and the 5-10 year inflation forecast decreased to 2.4% from the previous 2.6% rate.
Wholesale inventories were revised higher to a 0.8% m/m rise for October from the preliminary estimate of a 0.7% gain, where it was expected to remain. September’s figure was revised upwards to a 0.7% increase from the preliminary report of a 0.6% rise. Sales were down 0.2% m/m, compared to September’s downwardly-revised 0.1% gain. The inventory-to-sales ratio—the amount of time it would take to deplete inventories at the current sales pace—increased slightly from September’s 1.27 months rate to 1.28.
Treasuries were higher, with the yields on the 2-year and 10-year notes falling 4 basis points (bps) to 2.72% and 2.85%, respectively, while the 30-year bond rate decreased 2 bps to 3.14%.
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