Markets edge higher for data that could influence interest rates

Dow pulled back 102, decliners over advancers better than 3-2 & NAZ was up 163 to a new record.  The MLP index was off 5+ to the 311s following recent strength & the REIT index dropped 4+ to the 431s.  Junk bond funds were mixed & Treasuries had selling which raised yields (more below).  Oil crawled higher in the 68s & gold dropped 17 to 2663.

Dow Jones Industrials

Nov was a month to remember for the stock market.  The S&P 500 climbed 5.7%, the Dow jumped 7.5%, marking their best monthly performance this year.  NAZ closed 6.2% higher for its most positive month since May.  Recently, a host of factors have pumped up sentiment for stocks.  The presidential elections concluded with Donald Trump definitively securing the top seat in the White House.  That erased any uncertainty, which investors hate.  Also, Trump 2.8% annualized rate for the 3rd qtr.  Even though gross domestic product is forecast to be 1.3% in the 4th qtr, according to the St Louis Fed forecast, that still denotes an expansion, a stark contrast against nagging fears that a recession would strike the economy.  Slowing growth even has a silver lining.  It gives the Federal Reserve more incentive to cut rates a 2nd time this year at its Dec meeting, which would stimulate economic activity.  Nov's seasonal strength for stocks sent a course of good feelings into investors. 

November was a month to remember for stocks

Treasury yields were higher as investors awaited labor & manufacturing economic data this week.  The yield on the 10-year Treasury rose by 1 basis point to 4.207% & the 2-year Treasury yield rose by 3 basis points to 4.206%.  On Fri, the 10-year Treasury yield had fallen to its lowest levels since late Oct.  1 basis point equals 0.01% & yields & prices move in opposite directions.  Investors are keenly anticipating labor data which will offer insights about the strength of the US economy.  First, the Job Openings & Labor Turnover Survey for Oct will be published on Wed & provide estimates of the number of job openings, hires, layoffs & quits.  The Nov jobs report will be published on Fri & is expected to show that the US economy added 177K jobs last month, up from 12K jobs in Oct.  Additionally, the unemployment rate is set to rise to 4.2%, up from 4.1% previously.

Treasury yields rise as investors look to key labor data this week

The business activity in the US manufacturing sector continued to contract, albeit at a softer pace in Nov, with the ISM Manufacturing PMI rising to 48.4 from 46.5 in Oct.  This reading came in better than the market expectation of 47.5.  The Employment Index of the PMI survey edged higher to 48.1 from 44.4 in the same period & the Prices Paid Index retreated to 50.3 from 54.8.  Finally, the New Orders Index improved to 50.4 from 47.1. 

US ISM Manufacturing PMI improves to 48.4 in November vs. 47.5 expected

Dec begins on a high note, having ended Nov with the best monthly gains for stock averages in a year.  The rally got a boost last month thanks to optimism around Pres-elect Trump's victory.  YTD the Dow has gained nearly 20% & tech-heavy NAZ has gained nearly 30%.