[New York Stock Market] S&P 500 and Nasdaq Hit New Highs Again... Employment Data in Focus This Week

Pat Gelsinger Intel CEO Resigns... Stock Down 0.5%
November Manufacturing Continues to Contract
Employment Data in Focus... Nonfarm Payrolls Released on 6th

The three major indices of the U.S. New York stock market closed mixed on December 2, the first trading day of the month (local time). The S&P 500 and Nasdaq indices hit record highs, raising expectations for a year-end Santa rally. Investors awaited the employment data to be released in large numbers this week.

On that day in the New York stock market, the blue-chip-focused Dow Jones Industrial Average (Dow) closed at 44,782, down 128.65 points (0.29%) from the previous trading day. The large-cap-focused S&P 500 rose 14.77 points (0.24%) to 6,047.15, and the tech-heavy Nasdaq gained 185.78 points (0.97%) to close at 19,403.95, each setting new all-time highs.

By individual stocks, Intel fell 0.5% after CEO Pat Gelsinger announced his resignation. Former CEO Gelsinger was brought in in 2021 as a savior aiming to rebuild Intel as the "semiconductor king." However, over the past four years, Intel lagged behind the AI boom and suffered deteriorating performance, rapidly declining and was effectively dismissed by the board. Tesla rose 3.46% after Ross MKM upgraded its investment rating from "neutral" to "buy." The company viewed Tesla CEO Elon Musk's close relationship with then-President-elect Donald Trump, dubbed the "First Buddy" (the president's close friend), as a positive factor for future stock price gains. Super Micro Computer surged 28.68% after a special committee investigating accounting fraud announced it found no evidence of wrongdoing, and the company appointed a new accounting officer.

Last month, the New York stock market rose on the victory of Trump, who promised business-friendly policies. The Dow rose 7.5%, and the S&P 500 jumped 5.7%, marking the highest monthly gains this year. The Russell 2000 index, composed mainly of small- and mid-cap stocks, rose more than 10%. Bitcoin, the leading cryptocurrency, soared 38% in November on Trump's pledge to ease regulations. Given the strong performance of the New York stock market so far this year, expectations for a "Santa rally" continuing into December are spreading in the market.

Jay Hatfield, CEO of Infrastructure Capital, said, "The stock market is expected to rise further, but there will be no surge," adding, "We anticipated an upswing under the pro-business new administration, but now detailed policy information, not just simple messages, is needed." He further predicted that the S&P 500 could rise to the 6,200 level by year-end.

The U.S. manufacturing index released that morning showed continued contraction. The Institute for Supply Management (ISM) reported the November manufacturing Purchasing Managers' Index (PMI) at 49.7. It exceeded both the previous month (48.5) and expert forecasts (48.8), but manufacturing activity remained in contraction. The manufacturing PMI, a leading economic indicator, signals expansion when above 50 and contraction when below 50.

This week, market attention is expected to focus on employment data. The U.S. Department of Labor will release November nonfarm payrolls on the 6th, a key point to watch. The market expects nonfarm payrolls to have increased by 200,000 based on Bloomberg forecasts. In October, due to two hurricanes and a Boeing strike, the increase was only 12,000. However, compared to the 223,000 increase in September nonfarm payrolls, a large increase is not expected. The unemployment rate is forecast to remain steady at 4.1%. Other employment data will be released consecutively: the Department of Labor's October Job Openings and Labor Turnover Survey (JOLTs) on the 3rd, ADP's November private nonfarm employment on the 4th, and weekly initial jobless claims on the 5th.

These employment figures are expected to influence the Federal Open Market Committee (FOMC) regular meeting rate decision scheduled for December 17-18. For now, the market is pricing in a high probability of a rate cut this month. According to the Chicago Mercantile Exchange (CME) FedWatch, the federal funds futures market on that day reflected a 74.7% chance of a 0.25 percentage point rate cut at the December FOMC meeting and a 25.3% chance of rates remaining unchanged. Following last month's manufacturing contraction news, the probability of a small cut (0.25 percentage points) rose from the 60% range that morning.

On the 4th, the Federal Reserve (Fed) will release the Beige Book, a report on economic conditions. Speeches by Fed Chair Jerome Powell and Chicago Fed President Austan Goolsbee are also scheduled this week. Investors are expected to seek clues about the current economic assessment, outlook, and future rate path from the Fed officials' remarks.

Government bond yields remained steady. The U.S. 10-year Treasury yield, a global bond yield benchmark, was nearly unchanged at 4.18%, while the 2-year Treasury yield, sensitive to monetary policy, rose 1 basis point (1 bp = 0.01 percentage point) to 4.18% compared to the previous day.