Stocks declined on Thursday ahead of the November jobs report, set for release at 8:30 am ET Friday morning.
First, the scoreboard:
- Dow: 17,887.7, -25, (-0.1%)
- S&P 500: 2,070.5, -4, (-0.2%)
- Nasdaq: 4,767.2, -7.2, (-0.1%)
And now, the top stories on Thursday:
1. The European Central Bank made its final monetary policy announcement of the year, keeping interest rates unchanged, while ECB president Mario Draghi held his final press conference of the year, disappointing the market with his comments on the future of ECB stimulus measures. The ECB also released updated projections for growth next year, taking its 2015 GDP growth outlook to 1% against prior expectations for 1.6% growth. Draghi also said that the ECB will address the possibility of additional stimulus “early” next year, but specified that “early” did not mean January. Following his comments, the euro rallied.
2. We got the final piece of employment data this week before Friday’s big jobs report, with the weekly report on initial jobless claims showing that claims fell back below 300,000 last week. Claims totaled 295,000 last week, down from 313,000 last week, though the four-week moving average of claims rose slightly, to 299,000, up about 5,000 from last week.
3. Friday’s main event is the jobs report, which Wall Street expects will show the economy added 200,000 jobs for the tenth-straight month, extending its streak which is already the longest since 1993-1995. The unemployment rate is expected to remain at 5.8%, the lowest level since 2008 and wage growth is expected to remain tepid at 0.2% month-on-month and 2.1% year-on-year.
4. The recent decline in oil prices has been argued as a net positive for the US economy, as most of the economy is comprised of consumers, who are getting a big tax break from declining gas prices. At a media event on Thursday, Charles Schwab’s Liz Ann Sonders offered three sentences putting the maths behind why this is good for the US in perspective: “Consumer spending represents 68% of the US economy. Oil and gas capex represents about 1% of US GDP and less than 9% of US total capex (which in turn represents about 12% of US GDP). Therefore, the benefit of lower energy prices to the consumer and many businesses greatly outweighs the significant hit to energy companies and/or energy-oriented capex, especially in energy-oriented states.”
5. Bill Gross released his latest investment outlook on Thursday, and asked whether or not our grandchildren will look back at the economic policies pursued following the financial crisis and ask, “how could they?” Gross, who is always an interesting read, concluded his outlook on a cautious note, writing that, “Investors may want to begin to take some chips off the table: raise asset quality, reduce duration, and prepare for a halt of asset appreciation engineered upon a false central bank premise of artificial yields, QE, and the trickling down of faux wealth to the working class.”
6. Sears announced on Thursday that it lost almost $US300 million in the third quarter and that it plans to close hundreds more stores. And Business Insider’s Ashley Lutz, citing retail analyst Robin Lewis, reports that now, it appears that the company’s collapse is “inevitable.”
7. DoubleLine’s Jeffrey Gundlach called for the dollar to break out from a multi-year decline back in the summer. The dollar has staged a huge rally over the last several months and has been one of the hottest trades in the world. Gundlach’s call for the dollar going forward: it is headed higher.
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