The S&P 500 index rose 1.1% last week as investors were encouraged by data showing consumer spending increased as inflation eased in October, while the November jobs report showed stronger-than-expected growth.
The S&P 500 ended November on Wednesday with a 5.4% monthly gain that followed an 8% October jump, marking the first string of back-to-back monthly gains all year. However, the index is still solidly in the red for the year to date with a 15% drop for 2022 with less than a month remaining.
The year’s decline has come on rising inflation and interest rates for much of 2022. However, gains have come in the last two months amid recent signs that inflation may have peaked while Federal Reserve officials are starting to hint that the central bank’s pace of rate increases could soon start slowing.
Data last week showed US consumers spent more in October than they did the prior month while the Federal Reserve’s preferred inflation measure decelerated. This boosted expectations that a downshift in the central bank’s interest rate increases could be imminent, especially as Chair Jerome Powell said on Wednesday that “the time for moderating the pace of rate increases may come as soon as the December meeting.” Nevertheless, Powell also said inflation is still “far too high.”
November jobs data on Friday showed nonfarm payrolls rose by 263,000 last month, well above an increase of 200,000 jobs expected in a survey compiled by Bloomberg. Private payrolls rose by 221,000 in November, surpassing the increase of 188,000 private jobs expected. The unemployment rate held steady at 3.7% in October, as expected. Hourly earnings rose by 0.6%, much faster than the 0.3% gain expected.
All but two of the S&P 500’s sectors rose last week, led by a 3.3% climb in communication services and a 2.1% rise in consumer discretionary. Other gainers included health care, which rose 1.9%; materials, up 1.5%; and technology, up 1.3%. On the downside, meanwhile, energy fell 2% while financials edged down by 0.6%.
This week’s US economic reports are expected to include November readings on the services sector, factory orders for October, the producer price index for November, and the University of Michigan’s first reading of December consumer sentiment.
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