Stocks rose Friday after closely watched employment data came in largely as expected, reinforcing investor confidence in the strength of the economy and expectations that the Federal Reserve will cut interest rates again.
The S&P 500 and Nasdaq Composite recently were up 0.1% and 0.6%, respectively, after hitting new all-time highs this morning, while the Dow Jones Industrial Average slipped 0.3%, giving back earlier gains. Stocks were coming off a down session on Thursday, when the equities market hit the pause button on a post-election rally that has pushed major indexes to a series of record highs.
The Labor Department’s jobs report for November showed that employers added 227,000 jobs in November, a big jump from the previous month but only slightly higher than the number economists had anticipated, while the unemployment rate was in line with expectations at 4.2%. The employment numbers are among the last key pieces of data before the Fed’s next interest rate decision, which is scheduled for Dec. 18.
The yield on 10-year Treasurys, which is sensitive to expectations about where interest rates are headed, were at 4.16% recently, down from 4.18% just before the release of the employment data. Markets are now pricing in an 85% chance the Fed will cut its benchmark rate by a quarter point this month, up from the 70% likelihood priced in yesterday, according to the CME Group’s FedWatch tool.
Among noteworthy stocks on the move Friday, Hewlett Packard Enterprise (HPE) shares were up 11% after the server maker reported better-than-expected quarterly results, buoyed by strong AI demand. Shares of Lululemon (LULU) rose 17%, leading S&P 500 gainers, after the maker of athletic apparel reported strong earnings and raised its outlook. Ulta Beauty (ULTA) and Docusign (DOCU) were up 10% and 27%, respectively, after reporting earnings.
Shares of large-cap technology stocks were mostly higher, led by Meta Platforms (META), which was up more than 2% after a federal appeals court ruled that TikTok can be banned by the government for national security reasons. Apple (AAPL), Microsoft (MSFT), Tesla (TSLA), Amazon (AMZN) and Alphabet (GOOGL) also rose, while AI investor favorite Nvidia (NVDA) fell 2%.
Bitcoin was trading at $101,600, up from below $98,000 earlier in the day but still below the record high near $104,000 set late Wednesday. The digital currency has gained about 40% since the presidential election amid investor hopes that a Trump White House and supportive Congress will adopt measures that benefit the crypto industry.
Gold futures were up slightly at $2,660 an ounce, while crude oil futures fell about 1%.
Analysts Raise HP Enterprise Price Targets After Earnings
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Hewlett Packard Enterprise (HPE) shares popped after the company’s better-than-expected fiscal fourth-quarter results drew price target bumps from analysts.
Stifel reiterated its buy rating for the server maker and upgraded its price target to $25 from $22, calling the company’s shares “undervalued” amid “strong demand for [artificial intelligence (AI)] servers and signs of a recovery in traditional servers.”
Morgan Stanley upgraded HP Enterprise to “overweight” from “equal weight” and raised its price target to $28 from $23. The firm noted that HP Enterprise outperformed its results from last quarter “driven by AI servers.” AI server revenue was in line with expectations at $1.5 billion.
HP Enterprise shares were up 11% at $24 in mid-afternoon trading Friday. The stock has risen 42% since the start of 2024, outpacing the S&P 500’s gain of 28% over the period.
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In its fiscal fourth quarter, HP Enterprise posted record revenue of $8.5 billion, up 15% year-over-year and above the analyst consensus compiled by Visible Alpha. Net income was $1.34 billion, or 99 cents per share, up from $642 million, or 49 cents per share, a year earlier.
HP Enterprise server revenue jumped 32% to $4.7 billion, above analysts’ estimates. In October, the company unveiled new servers powered by Advanced Micro Devices (AMD) chips and designed to support AI clusters for tasks like training large language models.
Lululemon Leads S&P 500 Gainers After Earnings
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Lululemon Athletica (LULU) shares soared on Friday after the activewear retailer reported fiscal third-quarter results that topped analysts’ estimates and raised its full-year outlook.
Lululemon shares were up 18% at $407 in recent trading, leading gainers in the S&P 500 and Nasdaq Composite. Even with today’s gain, the stock has lost about a fifth of its value since the start of the year.
Lululemon shares formed an inverse head and shoulders between May and November before breaking out above the pattern’s neckline earlier this week ahead of the company’s quarterly report.
Moreover, the 50-day moving average (MA) has turned upwards toward the 200-day MA, setting the stage for a potential golden cross—a bullish chart signal that indicates the start of a new uptrend.
Investors should watch important overhead resistance areas on Lululemon’s chart around $389, $419, and $468, while also monitoring a key support level near $335.
Read the full technical analysis piece here.
Market Pricing in Greater Likelihood of December Rate Cut
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Friday’s jobs report bolstered traders’ belief that the Federal Reserve will cut its influential interest rate again in December.
In November, employers added 227,000 jobs to the economy, slightly higher than the 214,000 number economists had expected. The unemployment rate rose to be in line with expectations.
In the wake of the report, traders were pricing in an 87% chance that the Fed will make a quarter-point cut in their meeting on Dec. 17-18, according to the CME Group’s FedWatch tool, which forecasts rate movements based on fed funds futures trading data. That’s up from 71% on Thursday and 66% last week.
“It was already widely expected that the Federal Open Market Committee would move forward with another 25-basis point rate cut in December, and the latest employment report is unlikely to change that,” wrote Moody’s Analytics’ Economist Dante DeAntonio.
Traders have been especially sensitive to jobs data as Federal Reserve officials work to balance their fight against inflation with the mandate to keep unemployment low. Concerns about a weakening job market spurred the Fed to cut its influential fed funds rate for the first time since 2020 in September. The central bank cut the key rate again last month.
Eugene Gologursky / The New York Times / Getty Images
Fed Chair Jerome Powell said earlier this week that the continued strength of the economy allows the Fed to be cautious as it considers additional rate cuts.
Today’s jobs report was one of the last key pieces of data for the Fed to digest before this month’s policy meeting. Fed officials will be keeping a close eye on consumer and wholesale inflation data that are scheduled to be released next week.
Peloton Surges After UBS Upgrade
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Shares of Peloton Interactive (PTON) jumped Friday after UBS upgraded its rating on the stock and raised its price target, pointing to the fitness equipment and services company’s cost-cutting moves.
The bank lifted its rating to “neutral” from “sell,” and boosted the price target to $10.00 from $2.50. The analysts wrote in a note to clients that because of the reduced costs, especially operating expenses, they see earnings before interest, taxes, depreciation, and amortization (EBITDA) beyond the $200 million Peloton has estimated.
They also pointed to the selection of former Ford (F) executive Peter Stern as the new CEO, who is taking over in January. UBS said that Stern has a clearer setup “to register early success with low hanging fruit growth initiatives such as subscription pricing increase.”
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Peloton Interactive shares recently were up 7% and trading at their highest levels since April 2023.
Amazon Price Levels to Watch as Stock Hits Record Highs
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Amazon (AMZN) shares hit another record high Friday morning, boosting their year-to-date gain to 48%.
Among news developments supporting the strong performance, the tech giant said Tuesday it’s building a supercomputer using its in-house Trainium chips, which will be be used by AI start-up Anthropic. According to a report in The Wall Street Journal, the move positions the company to take on AI favorite Nvidia (NVDA) in the lucrative graphics processing unit (GPU) chip market.
Separately this week, the e-commerce titan reported record sales and number of items sold at the start of the holiday shopping season, with the company saying the majority of sales came from independent sellers.
Amazon’s gains so far in 2024 have handily outpaced the S&P 500’s return of about 28% over the period. The stock was up 2% to $225 in recent trading.
After breaking out from an ascending triangle last month, Amazon shares retested the initial breakout area before moving higher, signaling a continuation of the stock’s longer-term uptrend.
The measuring principle, which calculates the distance between the ascending triangle’s two trendlines and adds that amount to the pattern’s breakout area, forecasts an upside target in the stock of $250.
Investors should watch major support levels on Amazon’s chart around $200, $190, and $175.
Read the full technical analysis piece here.
Docusign Soars as Profit Doubles Expectations
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Docusign (DOCU) shares soared Friday morning, a day after the e-document software provider posted better-than-expected results and raised its guidance as billings and subscription revenue surged.
The company reported third-quarter fiscal 2025 profit of $62.4 million, or $0.30 per share, while analysts surveyed by Visible Alpha projected $30.2 million, or $0.14 per share. Revenue of $754.8 million also beat estimates.
CEO Allan Thygesen said Docusign had “sustained momentum in new customer growth at 11% year-over-year to 1.6 million customers.”
The company now sees full-year revenue of $2.959 billion to $2.963 billion, compared to the earlier estimate of $2.940 billion to $2.952 billion.
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Docusign shares were up 22% in recent trading, at their highest level since April 2022.
Ulta Beauty Levels to Watch After Post-Earnings Surge
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Ulta Beauty (ULTA) shares traded sharply higher in premarket trading Friday after the cosmetics retailer surpassed Wall Street’s earnings expectations and raised its outlook.
The stock sits poised to break above the upper trendline of an ascending triangle after the company’s upbeat quarterly results, setting the stage for a potential upside reversal.
Investors should watch key overhead areas on Ulta Beauty’s chart around $435, $465, and $497, while also monitoring a crucial support level near $412.
The stock was up 10% at $432 about ten minutes before Friday’s opening bell.
Read the full technical analysis piece here.
Major Index Futures Mixed Ahead of Jobs Data
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Futures tied to the Dow Jones Industrial Average were down 0.1%.
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S&P 500 futures were also off 0.1%.
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Nasdaq 100 futures were up fractionally.
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