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End of Day Brief - Friday Dec 3 - Markets down as large tech gets hit

SP 5004538.43-38.67(-0.84%)
10-yr Note +23/321.343
NYSEAdv 877 Dec 2340 Vol 1.10 bln
NasdaqAdv 1006 Dec 3461 Vol 5.81 bln

Industry Watch

Strong: Energy, Consumer Staples, Materials
Weak: Financials, Technology, Consumer Discretionary, Communication Services

Moving the Market

November jobs report misses headline estimates

Congress passes another short-term funding bill

Oil rising toward its 200-day moving average (69.90)

Dow -59.71 at 34580.08, Nasdaq -295.85 at 15085.47, S&P -38.67 at 4538.43

[BRIEFING.COM] The major averages finished the week on an uninspiring note with the Nasdaq (-1.9%) pacing a daylong retreat while the S&P 500 (-0.8%) and Dow (-0.2%) recorded slimmer losses. The three indices lost a respective 2.6%, 1.2%, and 0.9% for the week.

Small caps fared even worse with the Russell 2000 (-2.1%) falling 3.9% for the week.

The sharply lower finish represented a turn from the market's higher open, which followed the release of the Employment Situation report for November. The report missed headline estimates but also contained some positive elements like upward revisions to October figures and a drop in the unemployment rate.

The headline miss in the jobs report opened the door to an argument against accelerating the Fed's taper, but the market will need to see more before reversing its expectations for tighter policy in 2022, as the implied likelihood of a rate hike in June ticked up to 73.0% from 69.9% yesterday and 62.3% one week ago.

Eight sectors ended the day in negative territory with three losing 1.0% or more. The consumer discretionary sector (-1.8%) finished at the bottom of the leaderboard, right behind technology (-1.7%) and financials (-1.5%).

Growth stocks were among today's big losers with the likes of Microsoft ($MSFT 323.01, -6.48, -2.0%), NVIDIA ($NVDA 306.93, -14.33, -4.5%), Amazon ($AMZN 3389.79, -47.57, -1.4%), and Tesla ($TSLA 1014.97, -69.63, -6.4%) falling between 1.4% and 6.4%. NVIDIA's underperformance followed news that the FTC sued to block the company from completing its $40 bln acquisition of Arm Holdings.

Besides NVIDIA, roughly 2/3 of the components of the PHLX Semiconductor Index (-0.2%) finished in the red, but the but the index outperformed thanks to a spike to a fresh record in Marvell ($MRVL 83.59, +12.56, +17.7%). The stock rallied after the company beat Q3 expectations and issued above-consensus guidance for Q4.

In other earnings, DocuSign ($DOCU 135.09, -98.73, -42.2%) dove to its lowest level since mid-2020 after its Q3 beat was overshadowed by weak revenue guidance for Q4.

Treasuries faced some selling during the first hour of trade, but they reversed higher as stocks surrendered their starting gains. The 10-yr yield fell 11 basis points to 1.34%, reaching its lowest level since late September.

In commodities, crude oil fell $0.26, or 0.4%, to $66.38/BBL, surrendering $1.79, or 2.6% for the week.

Reviewing today's economic data:

  • November nonfarm payrolls increased by 210,000 ( consensus 525,000). The 3-month average for total nonfarm payrolls decreased to 378,000 from 469,000 in October. October nonfarm payrolls revised to 546,000 from 531,000. September nonfarm payrolls revised to 379,000 from 312,000
    • November private sector payrolls increased by 235,000 ( consensus 500,000). October private sector payrolls revised to 628,000 from 604,000. September private sector payrolls revised to 424,000 from 365,000
    • November unemployment rate was 4.2% ( consensus 4.5%), versus 4.6% in October. Persons unemployed for 27 weeks or more accounted for 32.1% of the unemployed versus 31.6% in October. The U6 unemployment rate, which accounts for unemployed and underemployed workers, was 7.8%, versus 8.3% in October
    • November average hourly earnings increased 0.3% ( consensus 0.4%) versus a 0.4% increase in October. Over the last 12 months, average hourly earnings have risen 4.8%, versus 4.8% for the 12 months ending in October
    • The average workweek in November was 34.8 hours ( consensus 34.7), versus 34.7 hours in October. Manufacturing workweek increased 0.1 hours to 40.4 hours. Factory overtime was unchanged at 3.2 hours
    • The labor force participation rate increased to 61.8% from 61.6%. o The employment-population ratio increased to 59.2% from 58.8% in October.
  • The ISM Non-Manufacturing Index for November increased to a record high 69.1% ( consensus 65.0%) from 66.7% in October. The dividing line between expansion and contraction is 50.0%. The November reading marks the 18th straight month of growth for the services sector
    • The key takeaway from the report is the understanding that demand shows no signs of slowing and services sector activity, which comprises the largest swath of economic activity, continues to run at a record pace even with the constraints of labor shortages, logistics problems, and difficulty in obtaining materials
  • The IHS Markit Services PMI rose to 58.0 in the final reading for November from 57.0 in the preliminary reading but was down from October's final reading of 58.7
  • Factory orders for manufactured goods increased 1.0% m/m in October ( consensus +0.4%) following an upwardly revised 0.5% increase (from 0.2%) in September. Shipments of manufactured goods jumped 2.0% after increasing 1.0% in September
    • The key takeaway from the report is that the pace of order growth remained positive for nondefense capital goods, excluding aircraft -- a proxy for business spending

The market will not receive any notable data on Monday.

  • S&P 500 +20.8% YTD
  • Nasdaq Composite +17.1% YTD
  • Dow Jones Industrial Average +13.0% YTD
  • Russell 2000 +9.3% YTD

Source: (

Disclosure: I may trade in the ticker symbols mentioned, both long or short. My articles represent my personal opinion and analysis and should not be taken as investment advice. Readers should do their own research before making decisions to buy or sell securities. Trading and investing include risks, including loss of principal.

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