Markets opened higher after a weaker-than-expected jobs report

Dow went up 36, advancers over decliners about 3-1 & NAZ also added 36.  The MLP index lost 1+ to the 255s & the REIT index added 2 to the 376s.  Junk bond funds hardly budged & Treasuries had more buying, lowering yields again.  Oil dropped 2+ to about 70 (a 2 year low) & gold recovered 13 to 2049.

AMJ (Alerian MLP Index tracking fund)

Hiring by US companies unexpectedly cooled in Nov, the latest sign that the labor market is softening in the face of higher interest rates, according to the ADP National Employment ReportHiring.  US companies unexpectedly cooled in Nov, the latest sign that the labor market is softening in the face of higher interest rates, according to the ADP National Employment Report.  Companies added 103K jobs last month, below the 130K gain that was predicted & slightly lower than the revised 106K increase recorded in Oct.  The weaker-than-expected report comes in the wake of an aggressive tightening campaign by the Federal Reserve, which has hiked rates to the highest level since 2001.  Fed officials, including Chair Jerome Powell, have opened the door to at least one more hike this year & have signaled that rates will remain elevated for longer as they assess whether high inflation has retreated for good.  In a potentially welcoming sign for the Fed as it tries to wrangle inflation under control, wage growth continued to slow in Nov.  Annual pay rose 5.6% last month, the 14th straight month of slowing growth, according to the report.  It marked the lowest level of pay growth since Sep 2021.  For workers who switched jobs, wages climbed 8.3%, down from 8.4% the previous month.  The trade, transportation & utilities industry drove the biggest job gains last month, adding 55K new employees.  But there were also notable gains in other sectors including education & health services, financial activities & information.  The gains helped to offset losses in manufacturing, leisure & hospitality, & professional & business services.  "Restaurants and hotels were the biggest job creators during the post-pandemic recovery," said Nela Richardson, chief economist at ADP.  "But that boost is behind us, and the return to trend in leisure and hospitality suggests the economy as a whole will see more moderate hiring and wage growth in 2024."

Americans may have tougher time getting jobs as companies slow hiring after Fed's aggressive hikes

Holiday shoppers are turning to Walmart (WMT), a Dow stock & Dividend Aristocrat, for groceries & gifts, but CEO Doug McMillon said it's hard to predict how sales will look in the months after the peak shopping season.  The leader of the world's largest retailer said higher credit card balances & dwindling household bank accounts raise questions about how much consumers will spend, even after they showed more resilience than expected this year.  “If we had been talking last spring or at the beginning of last year, I expected more softness by this time of the year than we’re actually experiencing,” he said.  But, he added, “next year’s a different story.”  Deflation in some items is creating a new dynamic for WMT, McMillon said.  In general merchandise, the category that includes electronics, toys & other non-food items, prices have dropped by about 5% compared with a year ago.  For example, this holiday season WMT has 25 toy items under $25, including a Hot Wheels car for $1.18 & prices in food categories are about where they were a year ago, though fresh foods tend to fluctuate.  He said the company has seen the volume of its non-food sales “start to come back.”  Back-to-school helped drive some of that rebound.  “It’s gonna be interesting to watch what happens in the general merchandise categories in the year ahead because prices are so much lower,” he added.  WMT fell 1.90.

Walmart CEO says consumers may not be as resilient next year, even as deflation starts to show

Americans have continued to open up their wallets & spend over the past 2 years, even in the face of stubborn inflation & high interest rates.  However, there are some signs the willingness among consumers to keep paying steep prices is beginning to fade.  New data published by Wells Fargo indicates that while the US consumer remains stable, credit card volume is "losing steam."  Card volume, which measures spending by both credit & debit cardholders, came in at around $2.6T during the3-month period of Jul-Sep, a 5.3% increase compared to the same time last year.  However, that represents a notable slowdown from the same time period during 2022, when card volume grew by 13%, & an even bigger drop from the 3rd qtr of 2021, when it surged by 25%.  "After a strong 2021 and 2022, card volume growth has slowed during 2021, implying a moderation in consumer strength," the Wells Fargo report said.  A solid job market & big wage increases have helped to buoy consumer spending in recent months, despite high inflation.  However, many economists expect consumers to grow more cautious in the coming months as student loan payments resume & high interest rates continue to work their way thru the economy.  On top of that, more Americans are relying on their credit cards to cover necessities.  Credit card debt topped $1T earlier this year while delinquencies surged to an 11-year high in Aug.  Although inflation has cooled considerably in recent months, it remains up 3.7% compared with the same time one year ago, according to the most recent Labor Dept data.

Credit card spending by Americans is 'losing steam'

The Fed has been raising interest rates to slow the economy & its effects are starting to show up.  That should slow job growth (if any) & sluggish retail sales.  The stock market is facing headwinds.

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