The 2019 Santa Rally?

Fred Imbert of CNBC reports the Dow surges more than 300 points on blockbuster jobs data, S&P 500 erases losses for the week:
Stocks surged on Friday on the back of U.S. jobs growth that easily topped analyst expectations as Wall Street wrapped up a choppy week of trading.

The Dow Jones Industrial Average was up 337.27 points, or 1.2% at 28,015.06. Friday’s performance was the Dow’s best since Oct. 4, when it rallied 1.4%. The S&P 500 closed 0.9% higher at 3,145.91 — its biggest one-day gain since Oct. 15 — while the Nasdaq Composite jumped 1% to 8,656.53.

Shares of 3M (MMM) led the Dow’s strong gains, rising more than 4%. The energy sector was the best performer in the S&P 500, jumping 2%. Industrials and financials rose more than 1% each. Google-parent Alphabet closed 0.9% higher and hit an all-time high. Apple shares also reached record levels, gaining 1.9%. Goldman Sachs shares jumped 3.4%.

“The market is very strong,” said Mike Katz, partner at Seven Points Capital. “Every time we pull back for a couple of days, we shake out some weak hands, we got right back up to all-time highs.”

“Going into year-end, I think we’re going to get a pretty good push higher,” Katz added.

The S&P 500 came into the session down 0.7% for the week, but Friday’s strong gains helped the index recover those losses. The Dow and Nasdaq each entered Friday trading down more than 1% week to date. They were only down 0.1% each for the week after Friday trading ended.

Stocks also closed just below their record highs reached Nov. 27. The S&P 500 was just 0.3% away from hitting an all-time high. The Dow and Nasdaq are both 0.6% off their records.

The U.S. economy added 266,000 jobs in November, according to figures released by the Labor Department. Economists polled by Dow Jones expected a gain of 187,000. The unemployment rate fell to 3.5%, matching its lowest level since 1969.

“After the sharp slowdown at the start of the year, the recent rebound in employment growth is clearly encouraging, and suggests that the loosening in financial conditions this year is starting to support the economy,” said Andrew Hunter, senior U.S. economist at Capital Economics, in a note.

Treasury yields climbed to their session highs after the data was released, pushing prices down. The benchmark 10-year yield traded at 1.84% while the 2-year rate was at 1.62%.

Gold futures shed 1.2% to settle at $1,465.10 per ounce.

“There is a lot to like in today’s read,” said Mike Loewengart, vice president of investment strategy at E-Trade, about the jobs report. It also “puts a lot of questions to rest. It essentially means the Fed’s easing cycle is complete and it puts the US in a stronger position for trade war negotiations.”

Friday’s report comes as investors grappled with mixed signals on the U.S.-China trade front this week. China started off the week saying it wants tariffs to be canceled as part of a “phase one” trade deal. President Donald Trump later said he could hold off on any deal until after the 2020 U.S. election.

That rhetoric sent stocks tumbling to start off the week. However, Trump said Thursday the two countries were inching closer to a trade deal. China also extended an olive branch to the U.S. on Friday by waving import tariffs on some American pork and soybeans shipments.

But Larry Kudlow, director of the National Economic Council, told CNBC’s “Squawk on the Street” that Trump is prepared to “walk away” from the negotiations if some conditions are not met. “The president has said that if we can not get the enforcement and the assurances, then we will not go forward,” Kudlow said.

Both sides have less than 10 days to go before Washington is poised to impose even more tariffs on Chinese goods. Tariffs on another $156 billion in Chinese goods are set to go into effect on Dec. 15.
Emily McCormick of Yahoo Finance also  reports on how stocks jumped after a stellar jobs reports:
Stocks jumped Friday after the Labor Department’s November jobs report handily topped expectations. Treasury yields rose and gold prices sharply declined, as the latest sign of strength in the U.S. economy spurred risk-on trades.

Here’s where markets settled at the end of regular equity trading:
  • S&P 500 (^GSPC): +0.91%, or 28.48 points
  • Dow (^DJI): +1.22%, or 337.27 points
  • Nasdaq (^IXIC): +1.00%, or 85.83 points
  • 10-year Treasury yield (^TNX): +4.5 bps to 1.84%
  • Gold (GC=F): -1.27% to $1,464.20 per ounce
The financial sector was one of the leaders in the S&P 500, after the strong print on the labor market suggested the Federal Reserve would likely keep interest rates on hold. Shares of JPMorgan (JPM), which is also a member of the Dow, surged to an all-time high. Other Dow components including Apple (AAPL) and Nike (NKE) also hit record intraday highs.

The energy sector surged and crude oil prices spiked after OPEC and its allies agreed to reduce oil production by an additional 500,000 barrels per day (b/d) next year, bringing total output reduction to 1.7 million b/d.

The Labor Department’s “official” report on the health of the U.S. job market, released at 8:30 a.m. ET, reflected surging employment gains and a joblessness rate at a 50-year low.

Non-farm payrolls rose by a much better-than-expected 266,000 during the month. This was well above the 180,000 consensus, which had already been one of the strongest expectations of the year heading into a jobs report.

“This is a blowout number and the U.S. economy continues to be all about the jobs,” Tony Bedikian, head of global markets for Citizens Bank, said in an email. “Business owners may be getting more cautious due to trade and political uncertainty and growth may be slow, but consumers keep spending and the punch bowl still seems full.”

The results got a bump from the return of striking General Motors (GM) workers, which had created a net drag of 43,000 manufacturing jobs in October. Manufacturing payrolls rose by 54,000 in November, ahead of the 40,000 increase expected.

Meanwhile, the unemployment rate edged down to 3.5%, matching September’s rate to mark the lowest level since 1969. Average hourly earnings slipped slightly month on month to a 0.2% increase. And average hourly wages edged down to a 3.1% year on year, from 3.2% in October.

Heading into the November jobs report, other surveys capturing employment trends were mostly positive. The Institute for Supply Management’s November non-manufacturing employment index rose during the month, and weekly unemployment claims remained at relatively low levels. And economists had mostly shrugged off ADP/Moody’s most recent monthly print on private payrolls growth, which missed expectations.

Friday’s report serves as one of the last pieces of new data members of the Federal Reserve receive ahead of their December meeting. Market participants widely expect that central bankers will hold interest rates steady after three cuts earlier this year, as economic data firmed.

“Today’s jobs read puts a lot of questions to rest—it essentially means the Fed’s easing cycle is complete and it puts the US in a stronger position for trade war negotiations,” Mike Loewengart, vice president of investment strategy for E-Trade Financial, said Friday.

Later during Friday’s session, the University of Michigan released its closely monitored consumer sentiment survey for December, which also topped expectations.

The preliminary monthly headline consumer confidence index rose to 99.2 in December from 96.7 in November, coming in ahead of estimates for 97.0. The sentiment index has averaged 97.0 over the past three years, “the highest sustained level since the all-time record in the Clinton administration, Richard Curtin, surveys of consumers chief economist, said in a statement.

Curtin said the early December gain was mostly driven by more optimism among upper income households, which reported “near record gains in household wealth” due to increasing stock prices.
It's beginning to look a lot like Christmas. This morning's blowout US jobs report was all that Wall Street needed to send stocks surging higher. By the end of the day, here are some of the final numbers across all markets (click on image):

In terms of stock sectors, here are the numbers for today, this week and year-to-date (click on images):

As you can see, almost all sectors except Utilities (XLU), Real Estate (XLRE) and Staples (XLP) -- the defensive sectors -- were up big today. It's typical of a day like today to see cyclical sectors like Energy (XLE), Financials (XLF) and Industrials (XLI) rally hard.

For the week, Energy, Staples, Healthcare (XLV) and Financials led the rest of the sectors while Industrials, Consumer Discretionary (XLY) and Technology (XLK) lagged and posted negative returns.

Year-to-date, however, tech shares led by Apple (AAPL) and Microsoft (MSFT) are still leading the pack by a huge margin, up 41%, propelling the S&P 500 (SPY) up 26% (that’s price return, total return, it’s up 28%) and close to another record high:

It definitely looks like this year's Santa rally started early and going into year-end, a lot of nervous portfolio managers trailing their benchmark are going to be buying Apple, Microsoft and other tech shares hoping to bridge the gap.

No wonder CalPERS fired most of its equity managers, it's becoming increasingly difficult to beat the S&P 500 in these markets that move on trade headlines and are juiced up on steroids provided by the Fed and other central banks.

What's going to snap these markets? Some negative trade headline but I don't see anything else at this time.

I would only caution my readers that leading economic indicators like the ISM New Orders Index are rolling over and it's best not too get too caught up in these market blow-offs.

What else? The blowout jobs numbers from the BLS survey don't jive with those of the ADP which are turning down:

Still, consumers are spending like drunken sailors, Christmas is around the corner, people are feeling good, enjoy it while it lasts and it might last for a couple of more months.

Just remember, nobody rings the bell at the top, don't get caught like a deer in headlights.

Below, I'm embedding again a clip where influential bond investor Jeffrey Gundlach, the CEO of $150 billion DoubleLine Capital, sees a scenario where US stocks get crushed in the next recession — and likely won't recover for quite some time to come.

Second, White House economic advisor Larry Kudlow joins "Squawk on the Street" for the first White House reaction to the November jobs report. Take the time to watch this interview, Kudlow provides insights on jobs, inflation and the ongoing trade conflict.

Third, the markets are closing in on record highs again. CNBC's Tyler Mathisen and the Fast Money traders, Tim Seymour, Steve Grasso, Brian Kelly and Guy Adami discuss.

Fourth, Rob Thummel, portfolio manager at Tortoise and Sandy Villere, co-portfolio manager of Villere's Balanced Fund, discuss the energy sector.

Lastly, President Donald Trump speaks to reporters about the latest details out of the trade talks with China as well as other geopolitical events stating "something could happen on December 15th."