S&P 500 and Nasdaq Hit Record Highs 

US stock market closed higher on Friday, with the S&P 500 and Nasdaq Composite reaching new record highs. The market responded positively to the November jobs report, which showed a robust increase in job creation, largely in line with analyst expectations. 

November Jobs Report: Key Takeaways  

The Labor Department reported that the US economy added 227,000 jobs in November, a significant increase from the previous month. While this exceeded earlier projections, it was largely in line with economists’ forecasts. 

The unemployment rate held steady at 4.2%, reflecting ongoing strength in the labor market. This data underscores the resilience of the US economy despite persistent concerns about inflation and Federal Reserve policy.  

Impact of the Jobs Report on the Fed’s Rate Policy 

The positive jobs report reinforced expectations that the Federal Reserve will cut interest rates at its next policy meeting on December 18th. Market participants now see an 85% chance of a 25-basis-point rate cut, up from 70% the previous day, according to the CME Group’s FedWatch tool. 

Yields on 10-year Treasury bonds declined following the release of the jobs report, indicating a shift in investor sentiment. Lower yields are often seen as a sign that investors expect the Fed to ease monetary policy. 

Weekly Market Recap 

For the week, the major US indexes delivered mixed results:  

• The S&P 500 climbed +1.0%. 

• The Nasdaq Composite outperformed with a +3.3% gain. 

• The Dow Jones Industrial Average slipped -0.6%. 

Friday’s Closing Levels 

Investor Sentiment: Year-End Rally in Sight?  

The unemployment report did not alter the overall market outlook, as investors remain confident that the Federal Reserve will cut rates at its upcoming December meeting. Unless the next inflation report comes in significantly higher than expected, the likelihood of a rate cut is strong. 

With an interest rate cut on the horizon, the stage is set for a potential year-end rally. However, there’s a catch — much of the rally may have already been priced in. The S&P 500 is up 30% year-to-date, a remarkable gain by any measure. 

The uptrend remains firmly intact, and it’s difficult to bet against the market at this point. But the big question is whether it’s still a good time to buy. For many, the answer seems to be “yes”, as waiting for a pullback this year has often proven futile. Time and again, FOMO (Fear of Missing Out) has driven markets higher, leaving hesitant investors on the sidelines. 

Source: CBOE, Bloomberg 

This commentary is written by James Gomes, a seasoned finance industry veteran with extensive experience of over 30 years, including a substantial tenure at a reputable US bank exceeding 20 years.

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