The final trading month of 2024 kicks off in the week ahead, and promises one final push to the finish line to turn this year’s monster rally into one for the history books. A jobs report is on deck as well. Stocks are at or near all-time highs, and as far as investors are concerned, there appears to be no reason why they can’t go higher still — at least in the near term. The market may be expensive, and sentiment frothy, but cheerful investors point to a strong macroeconomic backdrop, and rosy earnings growth forecasts, to justify the prices. Seasonally speaking, the setup is favorable for stocks as well. December is the strongest month for the S & P 500 in any given year and, what’s more, promises the lowest volatility of any month on the calendar, according to Sam Stovall, chief investment strategist at CFRA Research. In data going back to 1945, he noted, the S & P 500 gained an average 1.6% during the month, rising in price more than three-quarters of the time. “Like something out of Santa Claus, you could say, ‘on Dasher, on December,'” Stovall said. “Because December continues to dash ahead, normally.” With the S & P 500 already up 26% on the year, a typical December gain could place 2024 among the best years in history. The S & P 500 has had just six years with gains above 27% in the last 50 years, per FactSet. But investors will have to navigate a slew of economic data this coming month, as well as uncertainty around the incoming administration’s policies. “While you can’t really time the market with those kind of valuations, I think you say to yourself, do I really want to be backing up the truck right now?” Stovall said. “We probably have to go through at least a correction in time, meaning that the market sort of treads water until earnings and sales improve, or you have a correction in price where the prices come down to more normal valuations.” The Dow Jones Industrial Average topped 44,000 for the first time ever this month, while the S & P 500 exceeded 6,000 for the first time. Both are less than 1% away from record highs, while the Nasdaq Composite is off by 1.6%. On Friday, all three major averages closed out a strong month of gains, each higher by more than 5% for November. November jobs report Next Friday will bring the November jobs report, which will be the last major look at the labor market before the Fed convenes for its Dec. 17-18 meeting — meaning it’s important for investors charting a path forward for interest rates next month and beyond. Investors are hoping that a sanguine report — one that shows solid growth in the labor market, albeit with some signs of cooling — will put the Fed on track to continue on its easing path. The November report is expected to show the U.S. economy added 177,500 jobs this month, per FactSet’s consensus estimate, a huge jump from the 12,000 jobs in the October report, a figure markets largely disregarded as “noisy” given the weather anomalies in the data. The unemployment rate is expected to rise to 4.2%, up from 4.1% previously, according to the FactSet consensus estimate. That could bolster confidence in a December rate cut. In recent days, markets have been paring back expectations for a reduction coming at next month’s meeting, but this week’s inflation report and GDP data revived hopes the central bank can lower rates at that gathering. Markets are currently pricing in roughly a 67% chance of a quarter-point rate cut at the December meeting, according to the CME FedWatch Tool . Elsewhere next week, there will be a smattering of earnings reports from enterprise software giant Salesforce, as well as discount stores Dollar General and Dollar Tree. Week ahead calendar All times ET. Monday Dec. 2 9:45 a.m. S & P PMI Manufacturing final (November) 10 a.m. Construction Spending (October) 10 a.m. ISM Manufacturing (November) Tuesday Dec. 3 10 a.m. JOLTS Job Openings (October) Earnings: Salesforce Wednesday Dec. 4 8:15 a.m. ADP Employment Survey (November) 9:45 a.m. PMI Composite final (November) 9:45 a.m. S & P PMI Services final (November) 10 a.m. Durable Orders (October) 10 a.m. Factory Orders (October) 10 a.m. ISM Services PMI (November) 2 p.m. Fed Beige Book Earnings: Campbell Soup , Hormel Foods , Dollar Tree Thursday Dec. 5 8:30 a.m. Continuing Jobless Claims (11/23) 8:30 a.m. Initial Claims (11/30) 8:30 a.m. Trade Balance (October) Earnings: Ulta Beauty , Hewlett Packard Enterprise , Dollar General , Kroger Friday Dec. 6 8:30 a.m. November Jobs Report 10 a.m. Michigan Sentiment preliminary (December) 3 p.m. Consumer Credit (October)
Wall Street kicks off December with jobs data on tap and the S&P 500 looking to enter the history books
Nov 29, 2024
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