MARKETS TODAY Dec 1 (Vica Partners) – The U.S. indexes finished Thursday mixed, with the Dow and S&P 500 falling after data showed that consumer spending rose sharply in October and job growth in November remaining strong. Today markets pricing in a 79% chance that the Fed will increase its key benchmark rate by 50 basis points in December.
The Dow Jones Industrial Average lost 195 points. The S&P 500 declined 0.09%, and the Nasdaq Composite rose 0.13%.
Key Market Statistics
- Dow, S&P 500 declined and the Nasdaq ended higher today
- 10-year Treasury yield down at 3.514%, the 2 year Treasury yield down at 4.236%
- S. Dollar Index (DXY) down at $104.72, declining 1.16%
- Bitcoin fell to $16,972, declining 1.49%
- Oil prices rise for a second day with Brent crude up $87.04, 0.08%, and US West Texas Intermediate up at $81.38 or +1.03%
The economy was expected to have added less jobs today however the unemployment rate and wage growth held steady
According to economists, they expected to have added 200,000 jobs, less than the 261,000 in October. The unemployment rate held steady at 3.7%, and average wage growth slowed to 0.3% month-over-month, from 0.4% in October.
However if payrolls don’t come down over the next few months, the Fed may have to do more tightening than the market expects.
According to Fed Chairman Fed Chairman Jerome Powell yesterday
Currently, the unemployment rate is at 3.7 percent, near 50-year lows and job openings exceed available workers by about 4 million — that is about 1.7 job openings for every person looking for work. The pace of job growth has slowed with the economy, from 450,000 per month in the first seven months of this year to about 290,000 in the past three months. The Fed needs to get it below 100,000
The S&P 500 still finished today above its 200-day moving average
The S&P 500 finished today above its 200-day moving average. The line has been a resistance level for the index, most notably in April, August and November. Since the late September lows the index is now up about 13.5%.
Vica Momentum Stock Report
U.S. Silica Holdings NYSE (SLCA) (Grade B+) 50 Day Average +4.13%, 100 Day Average +26.92%, 200 Day Average +22.81, YTD +36.91%.
U.S. Silica Holdings, Inc. makes & markets commercial silica, to a variety of end markets in the U.S. They make and distributes a range of commercial silica products including whole grain and ground products as well as other industrial mineral products that complement its commercial silica products. Oil & gas proppants is its biggest end market.
IMPORTANT TO READ; Low interest rates will return!
The Federal Reserve gave guidance that back in August of 2022 that they would raise rates to 4% and have. Rate adjustments have begun to drive down inflation and slow the pace of the economy. Company earnings will remain mixed with stronger support for Communication services, Consumer staples, Energy, Financials and Health care. As these sectors tend to perform well during recessions
Following 2022 we expect the Central Bank to initially raise rates and then begin to cut interest rates in late Q3 of 2023 to avoid recession. As the cure for inflation is not just raising rates. Vica analysts see a significant policy change coming by late spring of 2023 with Powell reversing direction… just look at 12 month declining lower commodity pricing and new reports on rising retail inventories.
Yearly commodity prices will continue to rise “as there are still production shortages” which include: iron, copper and crude oil – upside should continue.
Solid strategy for these type of market days ….
We suggest investing in companies that have solid balance sheets and offer dividends.
Look to Communication services, Consumer staples, Energy, Financials and Health care as these sectors tend to perform well during recessions.
When buying value and growth DON’T try to time market lows. Best to cost average “buy” value stocks, and resist most all tech and growth stocks where companies have negative margins. Our Teams continue to forecast negative valuations for speculative stocks.
*** Continue to watch for our daily momentum company watchlist
*** Look to Index ETF’s like SPY to outperform stocks and most managed funds
*** Energy is the Top Performing Sector in S&P 500 Year to Date and will regain strength
*** Banks will profit from higher interest rates on new loans and other products which will offset defaults
