TECH IS LAGGING
Market overview: The market ended lower Monday, though cut some losses into close despite weakness in tech amid rising Treasury yields ahead of the monthly jobs report later this week. Growth sectors of the market including tech stocks took a breather from their recent climb as Treasury yields started the week on the front foot as investors question recent bets on sooner rather later rate cuts ahead of key economic data this week.
The US jobs report next Friday will be the highlight of the week, with the University of Michigan data also in focus. The economy produced 130,000 in November, with the unemployment rate unchanged at 3.9%. The yield on the 10-year Treasury rose 4 basis points to 4.266%, with some suggesting the recent plunge in yields on Fed cut bets has been too much too fast.
Big tech stumbled, paced by a decline in Alphabet Inc Class A ($GOOGL) and Apple Inc ($AAPL), with the latter also weighed by concerns about iPhone production disruptions. Apple is reportedly facing iPhone supply disruptions in India as suppliers Foxconn and Pegatron stopped iPhone production at facilities near Chennai, India owing to adverse weather Reuters reported Monday, citing sources.
Meta Platforms Inc ($META), meanwhile, fell more than 1% after CEO Mark Zuckerberg sold 680,000 of his shares in the company in November, according to a US Securities and Exchange Commission filing.
Fundamental Outlook: Fed Chair Jerome Powell said on Friday that the risks of the U.S. central bank slowing the economy more than necessary have become "more balanced" with those of not moving interest rates high enough to control inflation, suggesting caution going forward. There will be no updates from Fed officials during the week as the central bank enters the traditional blackout period ahead of its Dec 12 - 13 meeting, meaning investors will have to concentrate on data releases for further monetary policy clues, and Friday’s official jobs report in particular. The week’s key economic data release will be Friday’s November jobs report, as investors try and gauge whether growth in the world’s largest economy is continuing to level off.
Economists expect the U.S. economy to have added 180,000 jobs in November, after 150,000 jobs were created in October, with the unemployment rate remaining at 3.9%. Average hourly earnings are seen rising 0.3% on the month, an annual rise of 4.0%.
Too strong a number would undercut bets that the Fed will begin loosening its restrictive monetary policy earlier than expected, presenting an obstacle to the fourth quarter rally in stocks and bonds. A weak number, on the other hand, could spark fears that the economy is cooling following 525 basis points of rate increases, potentially dampening risk appetite.
Technical Outlook: ES TRADING RANGE 4580- 4553
ES BUYS ABOVE 4580
STOP LOSS: 4575
TARGET: 4594/97 , MAJOR TARGET: 4608
ES SELLS BELOW: 4553
STOP LOSS: 4558/60
TARGET: 4538, MAJOR TARGET 4495