US equity indexes closed the week with varied performance as investors assessed the potential for the Federal Reserve to pause its easing cycle following the anticipated December cut. The S&P 500 ended the week at 6,090.27, an increase from 6,032.4 the previous week, while the Nasdaq Composite recorded a closing figure of 19,859.77 compared to 19,218.2 from the week prior.
In contrast, the Dow Jones Industrial Average settled at 44,642.52 on Friday, down from the previous week's 44,910.7. Health care and industrials, representing significant sectors in the Dow, showed weaker performance throughout the week. Conversely, notable increases in technology and communication services contributed to bringing the S&P 500 and Nasdaq to new record highs.
Tesla saw a remarkable 10% increase as a rally continued post-elections, while Salesforce shares surged by nearly double digits after fiscal Q3 revenue exceeded market expectations. In terms of employment data, Friday's nonfarm payrolls report displayed mixed results. The unemployment rate ticked up in November, contrary to predictions of no change.
Nonetheless, payrolls increased beyond expectations, accompanied by upward revisions for September and October. Additionally, hourly earnings surpassed estimates. "The rise in the unemployment rate despite the lower labor force participation rate hinted at softening, but it reflected somewhat slower hiring rather than new layoffs," stated a note from Morgan Stanley.
"A solid rebound in payrolls and the upward revision align with strong output and consumption growth anticipated in Q4." The odds for a 25-basis-point interest rate cut in December rose to 85% by Friday afternoon, a jump from 71% the prior day, as indicated by the FedWatch Tool. Looking ahead to October next year, the market anticipates only three more rate cuts. Fed Chair Jerome Powell remarked this week that policymakers could afford to be cautious while easing monetary policy, highlighting the resilience of the US economy. Earlier in the week, the Institute for Supply Management's US services index continued to signal expansion, albeit at a slower pace, while US job openings exceeded expectations..