Markets Wrap Up the Final Full Trading Week with Mixed Results

Markets Wrap Up the Final Full Trading Week with Mixed Results

The final full trading week of the year saw its share of ups and downs, as investors continued to weigh technology sector valuations and AI-related spending alongside mixed economic data. Global equities, as measured by the MSCI ACWI, finished the week down 0.03%, while domestic large-cap stocks, measured by the S&P 500, edged higher by 0.13%. Domestic small-cap stocks and emerging markets were the weakest performers, declining 0.83% and 1.52%, respectively.

U.S. Labor Market

The Bureau of Labor Statistics reported that U.S. employers added 64,000 jobs in November, exceeding expectations of roughly 45,000 and rebounding from a revised loss of 105,000 jobs in October, which was largely driven by a decline of 162,000 federal government positions tied to the government shutdown, while November gains were led by health care and construction hiring, and the unemployment rate increased to 4.6%, the highest level in more than four years.

Inflation Cools More Than Expected

Later in the week, the BLS reported that inflation cooled more than expected in November, with CPI rising 2.7% year over year, below estimates near 3.1% and down from September’s 3% reading, while core CPI increased 2.6%, the lowest level since March 2021, and shelter inflation slowed to 3%, the lowest since August 2021, and despite data collection caveats tied to the government shutdown, markets responded positively as equities moved higher following the release.

PMI Hits Six-Month Low

Elsewhere, S&P Global reported that U.S. business activity growth slowed in December, with the Flash U.S. Composite PMI falling to 53.0 from 54.2, the lowest level in six months, as both manufacturing and services activity moderated, business confidence for the year ahead weakened, and price pressures intensified, with S&P Global noting that the data suggest recent economic momentum is fading and that firms have become more cautious with hiring amid a more challenging operating environment.

Looking Ahead

For the week ahead, the government is scheduled to release its delayed initial estimate of third-quarter U.S. GDP on Tuesday, with the report coming more than a month later than usual due to the recent government shutdown and following a rebound in economic growth to a 3.8% annualized pace in the second quarter after contracting in the first quarter.

As Always

I’d like to leave you with the final line we’ve used since we started these commentaries back at the very height of market volatility in March 2020. Always remember that we create financial/investment plans not for the easy times, but to prepare for the tough ones.