Jobs Report Gives Fed Green Light for December Rate Hike

Credits: Yahoo!finance
Do not hold the delusion that your advancement is accomplished by crushing others." 
 - Cicero

BASKING RIDGE, NJ-Markets shrugged off a volatile week Friday to close positive, buoyed by a strong jobs report and an easing of uncertainty around the Federal Reserve's next interest rate decision. For the week, the S&P 500 grew 0.08%, the Dow gained 0.28%, and the NASDAQ added 0.29%.

Stocks surged late last week after a strong November jobs report gave investors renewed confidence in the economy. Data shows that the economy gained 211,000 jobs in November, beating the forecast of 200,000. More importantly, the October report was revised upward, giving us back-to-back months of strong labor market growth. The unemployment rate remained flat at 5.0%, while wages increased by 2.3% from a year ago.Digging deeper into the data, we see that jobs were created in multiple sectors of the economy, supporting broad-based growth. The upbeat report may give the Fed what it needs to go ahead with interest rate increases in the coming months.
Fed chair Janet Yellen also signaled her readiness to raise interest rates in speeches last week. She told Congress that gradual rate hikes are likely to begin in December as long as there are no major shocks that might undermine confidence in the economy. She also warned that waiting too long to raise rates might force the Fed into tightening monetary policy quickly to avoid overheating the economy.

Sign Up for E-News

However, the news overseas is not so rosy. Markets slid on Thursday when investors here and abroad reacted badly to the European Central Bank's new stimulus plans. Investors felt that the ECB's plans were too little, too late, and they responded by selling. In China, economic sentiment remains cautious as additional data shows that demand is still weakening and further risks to growth exist.

Bottom line: The jobs report and other domestic data may give the Fed the boost it needs to raise interest rates at the mid-December Open Market Committee meeting. Weighing on the other side are ongoing concerns about global growth; however, as long as nothing major happens between now and the December meeting, the odds seem to favor an interest rate increase.
Looking at the week ahead, investors will be poring over November retail sales data, consumer sentiment, and inflation reports ahead of the Fed's meeting on the 15th and 16th. Positive news would likely fuel additional speculation about a December rate hike.

Right now, markets appear to have a somewhat unhealthy codependence on central banks. As decoupling between the U.S. and the rest of the world continues, we can expect a seesaw of emotions to drive additional volatility. At the moment, a solid jobs report is being viewed favorably by investors because it takes away some of the uncertainty around interest rate hikes. However, sentiment could sour quickly when some other headline changes the odds. On top of the standard end-of-year shuffling of portfolios, we're expecting the next couple of weeks to be volatile.

Holiday deal-making drives auto sales. Black Friday and early holiday shopping propelled November motor vehicle sales to the biggest month in 14 years

Beige book shows economic activity expanding. A Federal Reserve report of anecdotal business activity shows that the economy expanded moderately between October and November.

OPEC votes to maintain production. Even as rig counts are falling under the weight of cheap oil, the important Organization of the Petroleum Exporting Countries (OPEC) organization voted to keep producing high volumes of oil to maintain market share.

Manufacturing report suggests gloom. A measure of manufacturing activity in the key Chicago area shows that a strong dollar, slowing global growth, and other factors may foretell weakness in the manufacturing sector.

About Wealth Financial Partners, LLC

Wealth Financial Partners is an independent retirement planning and wealth management firm based out of Basking Ridge, New Jersey with expertise in financial life planning including investments, long-term care insurance, life insurance, 401(k) rollovers, retirement planning, tax planning and wealth conservation. For more information about Wealth Financial Partners, LLC, (877) 714-2362

106 Allen Road, 1st Floor, Basking Ridge, NJ 07920

Securities and advisory services are offered through Independent Financial Group, LLC (IFG), a registered broker-dealer and investment advisor. Member FINRA/SIPC. Wealth Financial Partners and IFG are unaffiliated entities. OSJ Branch: 12671 High Bluff Dr. Ste 200 San Diego, CA 92130 licensed in: CA, FL, GA, KS, MN, NY, NJ, IL, PA, OH, SC, CT. 

Information provided is from sources believed to be reliable however we cannot guarantee or represent that it is accurate or complete. Because situations vary, any information provided on this site is not intended to indicate suitability for any particular investor. Hyperlinks are provided as a courtesy. 

The opinions expressed herein are the writer's alone, and do not reflect the opinions of or anyone who works for is not responsible for the accuracy of any of the information supplied by the writer.

TAP Into Another Town's News:

You May Also Be Interested In

Sign Up for E-News

Basking Ridge

Bedminster Woman Dies From Injuries After Being Struck by Car at Bridgewater Mall Parking Lot

July 12, 2018

BRIDGEWATER, NJ - A Bedminster woman has died from her injuries after being struck by a car in the parking lot of the Bridgewater Commons Mall on Monday.

Marion Kelley, 62, was struck by a vehicle while walking in Lot 4 near the Macy's merchandise pick up area at around 3:20 p.m. Monday.

The 2017 Mazda was driven by Chinmayi Parikh, 33, of Piscataway.

The crash is still being ...

Upcoming Events

Wed, July 18, 9:00 AM

The Wayrick Gallery, Scherman Hoffman Wildlife Sanctuary, Bernardsville

NJ Audubon: NJ Audubon Photography Instructors’ ...

Arts & Entertainment Green

Wed, July 18, 7:30 PM

Chatham United Methodist Church, Chatham

Masterwork’s Summer Sing Four to Feature Brahms

Arts & Entertainment

Thu, July 19, 9:00 AM

The Wayrick Gallery, Scherman Hoffman Wildlife Sanctuary, Bernardsville

NJ Audubon: NJ Audubon Photography Instructors’ ...

Arts & Entertainment Green

ReNew Salon and Spa Welcomes Senior Stylist Joan Mormilo

July 17, 2018

GILLETTE, NJ - ReNew Salon and Spa welcomes Senior Stylist Joan Mormilo to their staff. Mormilo brings with her over 20 years of excellent customer service in the salon and spa industry.

She has extensive product knowledge, focuses on keeping up-to-date on industry standards and practices, believes in mentoring young stylists, and is a team player who strives to ...

Avoiding 10% Tax Penalty

Do you want access to money from your retirement accounts but aren't sure of the real costs involved?

Most retirement accounts have a set age requirement you must reach before making penalty-free income distributions, which is usually 59.5 but can sometimes be as early as age 50. If you decide to access your accounts earlier, you could face penalties ranging from 10%-25%, which is not ...

Beneficiary Forms - As Important as Your Will

As you plan for the future, don’t leave out one of the most overlooked must-do’s: naming the beneficiaries of your retirement assets. Updating your beneficiary forms ensures that the legacy you worked so hard to build will be distributed correctly. Don’t delay -- the designations on your beneficiary forms supersede those stated in your Will. 

Try answering the ...