Capital Market Implications for the Week of December 4 - 8, 2017
November’s employment reports were last week’s major releases. Both ADP’s employment change report and the Bureau of Labor Statistics change in nonfarm payrolls report indicated the economy continued to support healthy job growth last month: ADP reported 190,000 jobs were created during the month while the Bureau’s release was higher at a gain of 228,000 jobs. November’s unemployment rate at 4.1 percent was unchanged from the previous month. With the workforce growing at approximately 100,000 new entrants monthly, the current pace of job creation suggests the economy is at or close to full employment. Finally, although consumer confidence, as measured by the University of Michigan Consumer Sentiment Index, declined in November, the NFIB Small Business Optimism Index reached a post-recession high of 107.5.
As market participants awaited the final version of the tax bill, capital markets meandered throughout the five day sessions. For the week overall, the S&P 500 Index gained 0.4 percent and the Dow Jones Industrial Average rose 0.5 percent. The week’s best performing equity sectors were financials and industrials, which increased 1.5 percent and 1.4 percent, respectively. The worst performing sectors for the week were real estate and utilities, which both lost -1.0 percent. International stocks ended last week relatively flat, as the MSCI EAFE Index was unchanged while emerging markets declined -0.5 percent. Interest rates held steady for the week and, as such, bond prices were little changed as well. The Barclays U.S. Aggregate Bond Index, U.S. corporate bonds, and high yield bonds all ended the week relatively unchanged, while ten-year municipal bonds rebounded 1.0 percent after having declined for the previous two weeks.
Get the PDF