US stocks ended Friday firm but marked the first weekly slide since Donald Trump won the race for the White House, as markets failed to capitalise on the historic oil supply cuts agreed by OPEC mid-week.
Even bullish non-farm payrolls earlier on Friday didn’t stir the market for long.
The S&P 500 market bellwether closed up just 0.04% at 2191 – 20 points below where the had begun the week. All told, it was only 52 points higher than where it closed on the night of the poll on Nov. 8, but marked a succession of record highs along the way.
The S&P Midcap 400 was up 0.1% at 1624 – down 14 points since Monday. Meanwhile, the S&P Smallcap 600 ended up 0.09% at 809 – also 14 lower than at the start of the week.
Meanwhile, a picture of who will be forming business-friendly polcies in 2017 began to emerge on Friday. US President-elect Donald Trump announced that he has tapped top business leaders and others for a forum to advise him on economic policy and job creation, which will be chaired by Blackstone chairman and chief executive Stephen Schwarzman and include General Motors’ Mary Barra, JP Morgan’s Jamie Dimon, BlackRock’s Larry Fink, IBM’s Ginni Rometty and Walt Disney’s Bob Iger, among others.
Early trading
US shares defied downside and opened higher on Friday, lapping up bullish non-farm payrolls data.
The S&P 500 market bellwether, which just thirty minutes before the opening was pointing to a 0.2% decline, opened higher and was last up 0.2% at 2193.
Among the top gainers were Realty Income Corp (NYSE:O) up 4.2% at $55.74 after it was upgraded by Zacks Investment Research from a “hold” rating to a “buy” rating in a research note
The brokerage currently has a $65.00 price target on the stock. Zacks Investment Research’s price objective suggests a potential upside of 15.35% from the stock’s previous close.
Online marketplace eBay (NASDAQ:EBAY) was second, up 3.3% at $28.29 after Olstein Capital Management L.P. boosted its stake in eBay Inc. by 3.6% during the third quarter, according to its most recent disclosure with the Securities and Exchange Commission.
US non-farm payrolls slightly surpassed forecasts, rising 178,000 versus a forecast 175,000 gain. The November unemployment rate also fell to 4.6% versus forecasts for 4.9%.
“Today’s positive US job figures, coming on the back of good economic numbers across the board, will further increase the odds of a rate rise at the next Fed meeting in mid-December. The healthy labour market mirrors the momentum we’ve seen in the economy since the summer, which has enjoyed strong PMI figures in both services and manufacturing,” said Nancy Curtin, Chief Investment Officer at Close Brothers Asset Management.
But she warned: “Crucially, the participation rate has not risen, which may take some of the shine off these figures for the Fed.”
Although oil prices were showing fatigue after a mid-week rally on OPEC’s supply cull deal, the West Texas Intermediate was still up 0.2% at $51.18 – its highest since mid-October. Oil futures raced 8% higher on Wednesday and a further 2.5% on Thursday.
The S&P Midcap 400 was up 0.4% to 1629 and led by Ascena Retail Grp (NASDAQ:ASNA) up 21.6% to $7.09 after bullish first quarter earnings which saw a turnaround to profitability on a year ago.
The S&P Smallcap 600 was up 0.2% to 810 and led by First Nbc Bank (NASDAQ:FNBC) up 10.6% to $7.85 on no specific news.
Non-Farm Payrolls UPDATED
US shares are still pointing south on Friday, despite the bullish top line numbers in the non-farm payrolls.
The number of jobs created in the world’s biggest economy in November was 178,000 – just slightly above forecasts of 175,000. The more significant item is that the unemployment rate has fallen from 4.9% in October to 4.6%. It too was forecast to remain at 4.9%.
But there is also some trouble ahead for US President-elect Donald Trump, or at very least a challenge: manufacturing jobs which Trump has pledged to protect slid by a further 4,000 in November. The forecast was a loss of 3,000.
The S&P 500 future was indicated down 0.2% - which compares with down 1.1% before the jobs report.
Despite the positive job figures, there's red across global markets Friday, indicating it could be a negative day on US indices.
Italy's weekend referendum, which could have broad political and economic consequences, could be causing jitters among some investors. The Italian stock market fell about 1% on Friday, and has dropped whopping 22% so far this year.
In a nightmare scenario, the referendum result could force the prime minister's resignation, spark a banking crisis and ultimately push Italy out of the eurozone.
Shares in Starbucks (NASDAQ:SBUX) dropped 2.4% to $57.10 premarket after the company announced that CEO Howard Schultz would step down from his post next year.
But Schultz isn't going away completely. Effective April 3, he will become executive chairman, where he will focus on innovation, the company's premium offerings and on social impact.
Shares in the gun manufacturer Smith & Wesson (NASDAQ:SWHC) look set to drop as investors expressed dissatisfaction with the company's latest quarterly results. Pre-market the shares were down 5.9% at $22.57.
Pre-Open
US jobs numbers are out today, and it looks like investors are going to wait and see how they turn out before hitting the ‘buy’ button.
Spread betting quotes indicate the Dow Jones will open around 11 points lower at 19,180 and the S&P 500 will shed three points and open at around 2,188.
“While the November jobs report is not necessarily being talked about with the same importance as some in the past, due to a rate hike being almost 100% priced in next week, it continues to be an extremely important economic release and should not therefore be overlooked,” advised Craig Erlam, of forex trading platform outfit Oanda.
“It’s very unlikely that today’s numbers will have any influence on the decision in a couple of weeks, not if recent commentary from the Fed is anything to go by, but it, along with others, will influence the pace of tightening next year and beyond,” Erlam suggested.
“A weak report for November once again sews the seeds of doubt that has prevented the Fed from raising four times this year, as was planned a year ago. The last few years have started with some disappointing numbers that have given voice to the economic doubters and those calling for the Fed to abandon its tightening plans and if we start a little earlier this time around, we could be waiting another year to see interest rates at 1%, something the markets are already not far from pricing in,” the analyst continued.
The market is expecting 175k jobs to have been added in November, which would represent an improvement on October’s 161k. The unemployment rate is seen holding steady at 4.9%.
Shares in overpriced coffee seller Starbucks Corporation (NASDAQ:SBUX) were on the slide in pre-market trading, cooling 2.8% after the company announced yesterday that Howard Schultz will quit as chief executive next year, to be succeeded by chief operating officer, Kevin Johnson.
Schultz will become chairman of the company on 3 April.
Even more under the gun in pre-market trading were shares of weapons maker Smith & Wesson Holding Corp (NASDAQ:SWHC) after investors decided that earnings, released last night, were not of sufficiently high calibre.
The shares are set to go off at half-cock when open outcry trading starts, and were down more than 6% in screen-based trading ahead of the bell.
The guns-maker’s earnings per share (EPS) for the second quarter of its financial year came in 12 cents ahead of Wall Street’s expectations at 68 cents, while revenue of US$233.5mln was also ahead of the Street’s best guess of US$227.6mln.
The fly in the ointment was third quarter guidance of EPS of 52 to 57 cents, versus the market’s expectation of 59 cents.
The company said the current quarter’s sales are expected to fall within the range of US$230mln to US$240mln, the midpoint of which is slightly below the Street’s consensus forecast of US$238mln.