Stocks rebounded slightly on Monday after a Black Friday crash on reports about the newly discovered coronavirus variant in South Africa.
The B.1.1.529 (Omicron) variant is being researched by the World Health Organization to determine on how effective vaccines are against it and how it spreads. Omicron was recently detected in Canada and President Biden has said that it is a “cause for concern, not a cause for panic” as very little is known about the new variant.
Heavy Data Week
Outside of speculation on the new coronavirus variant, investors are paying close attention to a data-filled week headlined by the November Employment Situation Report on Friday. The jobs report is currently expected to show the economy added 525,000 jobs in November following 531,000 added in October. Additionally, the unemployment rate is estimated to drop from 4.6% to 4.5% while average hourly earnings are expected to rise 0.4% as they did the previous month.
The unemployment rate is currently where it was back in early to mid 2017 as it is far below the peak of the pandemic but still above the extremely low rates of 3.5% right before the coronavirus first hit. The still relatively strong unemployment rate is undermined by the labor force participation rate being below where it was in 2019, leading to what some are calling the “Great Resignation”.
Outside of the monthly jobs report, initial unemployment claims are expected to rise from 199,000 claims to 255,000 claims. The large jump in claims comes as a result of a massive drop from 270,000 to 199,000 claims the previous week. Additionally, the 199,000 was far below weekly numbers even before the pandemic as it typically hovered around 210,000 claims before the pandemic. Despite a potential rise this week, average claims have been dropping significantly since September after it stayed mostly flat during the summer.
Rounding out economic data this week is the November Consumer Confidence report on Tuesday that is expected to drop from 113.8 to a reading of 111.0. Meanwhile, the ISM Manufacturing Index is expected to stay mostly flat moving from 61.1% to 61.0%. Lastly, the ADP Employment Change estimates are for the private sector to add 515,000 jobs in November following October’s 568,000 added.
Earnings
A moderate earnings week has a few big names set to report quarterly performance such as Hewlett Packard Enterprise (HPE), Salesforce (CRM), Kroger (KR), Ulta Beauty (ULTA), and others.
In addition, some of the largest Canadian banks are set to report such as Bank of Nova Scotia (BNS), Royal Bank of Canada (RY), Toronto-Dominion Bank (TD), and Bank of Montreal (BMO). Each bank is expected to report significantly better earnings-per-share (EPS) than the year ago quarter as the economy recovers from the pandemic and many quarantine measures were lifted as vaccines were distributed.
Outside of the Canadian banks there is no one particular industry dominating the list of firms to report this week.
Economic Events this Week
Tuesday
- 10:00 a.m. - Consumer Confidence
Wednesday
- 8:15 a.m. - ADP Employment Change
- 10:00 a.m.- ISM Manufacturing Index
- 10:30 a.m.- EIA Crude Oil Inventories
Thursday
- 8:30 a.m. - Initial & Continuing Claims
Friday
- 8:30 a.m. - Nonfarm Payrolls
- 8:30 a.m. - Unemployment Rate
- 8:30 a.m. - Average Hourly Earnings
- 10:00 a.m. - ISM Non-Manufacturing Index
Earnings Reports This Week
Tuesday:
Before the bell:
BNS, MOMO, BZUN, JKS
After the bell:
HPE, CRM, NTAP, BOX, ZS
Wednesday:
Before the bell:
RY, PDCO, GIII, DCI
After the bell:
PVH, SNPS, SPLK, FIVE, VEEV
Thursday:
Before the bell:
KR, TD, DG, CM, SIG
After the bell:
ULTA, MRVL, COO, JOAN, DOCU, OLLI
Friday:
Before the bell:
BMO, DOLE, BIG, GCO
Sector and Industry Sentiment
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