The S&P 500 rose on Friday to hit a new high for the year after the November jobs report and University of Michigan consumer survey data signalled a resilient economy and cooling inflation, fueling hopes for a so-called soft landing scenario.
The S&P 500 added 0.41 per cent to settle at 4,604.37, while the Nasdaq Composite rose 0.45 per cent to finish at 14,403.97. The Dow Jones Industrial Average gained 130.49 points, or 0.36 per cent, to end at 36,247.87.
The S&P 500 posted its highest close of the year last week, but had yet to exceed its 2023 intraday high set in July until Friday, when it topped 4,609 in afternoon trading.
The benchmark is now up about 20 per cent on the year and trading at its highest level back to March 2022.
All the major averages finished the week with gains. The broad market index jumped 0.2 per cent for the period, and the Dow finished marginally higher. Both indexes wrapped six winning weeks, their longest run since 2019. The Nasdaq advanced 0.7 per cent.
November’s nonfarm payrolls report showed an unexpected drop in the unemployment rate. The jobless rate fell to 3.7 per cent in November from 3.9 per cent the prior month. It was expected to remain the same. The economy added 199,000 jobs, slightly ahead of the 190,000 estimate from Dow Jones and well ahead of the 150,000 jobs added in October.
The data first raised concerns that the economy was running too hot for inflation to cool enough for the Fed to start retreating from its high-rates policy. Some traders expect the Fed to start cutting rates as early as next spring, with its latest policy meeting set for Wednesday.
On the other hand, the monthly jobs report could also support the notion that the Fed is guiding the U.S. economy toward a soft landing — a steady economic recovery amid falling inflation. Average hourly earnings, seen as a leading indicator of inflation, rose about as expected in November as the economy added more jobs than the prior month.
Meanwhile, a closely watched University of Michigan survey showed inflation expectations drop and consumer sentiment jump in December to it highest level since July.
These data points all help support the thesis that the Fed is likely done with its rate hiking cycle, said Mona Mahajan, Edward Jones senior investment strategist.
Shares of Boeing, FedEx, and Costco hit new highs for the year on Friday as investors bet the economy would skirt a recession.
Futures
The SPI futures are pointing to a 0.22 per cent rise.
Currency
One Australian dollar at 7:15 AM was buying 65.74 US cents.
Commodities
Gold has lost 1.56 per cent. Silver has fallen 3.25 per cent. Copper has gained 0.87 per cent. Oil has added 2.73 per cent.
Figures around the globe
European markets closed higher on Friday. London’s FTSE added 0.54 per cent, Frankfurt gained 0.78 per cent, and Paris closed 1.32 per cent higher.
Turning to Asian markets, Tokyo’s Nikkei fell 1.68 per cent, Hong Kong’s Hang Seng lost 0.07 per cent while China’s Shanghai Composite closed 0.11 per cent higher.
On Friday, the Australian share market closed 0.3 per cent higher at 7,194.92.
Ex-dividends
One company is going ex-dividend. Advanced Share Registry (ASX:ASW) is paying 0.25 cents fully franked.
Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.
