Markets Fall Monday; Investors Await PCE and Jobs Report Later in the Week

Last Updated: Wednesday, November 30, 2022 2:22 PM | Neal Farmer

Markets are off to a rough start this week with the S&P 500 falling 1.75% with protests escalating in China over its COVID regulations.

The country’s restrictive zero-COVID policies have led to the recent unrest as coronavirus cases are also hitting a new high with the protests likely boosting those numbers. Oil prices originally sank lower over the protests in China and uncertainty of its COVID regulations going forward but rallied as OPEC+ considers deeper output cuts.

Meanwhile, Federal Reserve Bank of St. Louis President James Bullard commented that markets are underestimating the likelihood of higher interest rates with Federal Reserve Bank of New York President John Williams saying officials have more work ahead of them to help fight against inflation.

Looking ahead to the rest of the week investors will be focusing on the November jobs report scheduled for release Friday morning and the October PCE report early on Thursday.

Jobs and Inflation

The November Employment Situation Report set to be released at the end of the week is expected to show the economy adding 200,000 jobs following 261,000 added in October. Additionally, the unemployment rate is projected to stay flat at 3.7% while average hourly earnings are estimated to rise 0.3% following the 0.4% gain the previous month. Overall the report is expected to show a stable economy but one that is growing rapidly which is mostly fine when in the context of a sub 4% unemployment rate and inflation cooling slightly.

The Personal Consumption Expenditure (PCE) report is expected to show prices rising 0.4%, compared to the 0.3% from September. Core prices (excluding food and energy) meanwhile are estimated to rise 0.2% in October after a 0.5% bump the previous month. The headline number may show stable price increases but the Fed’s preferred method to gauge inflation, Core PCE Prices, is showing a return to the targeted 2% annual inflation rate.

Lastly, the PCE report on Thursday is projected to show personal income and spending rising 0.4% and 0.8% respectively in October following a 0.4% and 0.6% gain the previous month. Consumer Confidence is estimated to drop slightly from a reading of 102.5 to 100.0 in November.

All in all, economic data this week looks like it will portray a relatively healthy economy with the Fed balancing curbing inflation and keeping the unemployment low with consistent jobs being added.

Earnings Round-Up

A moderate earnings week is highlighted by leading Canadian financial institutions such as Toronto-Dominion (TD), Bank of Nova Scotia (BNS), Royal Bank of Canada (RY), and Bank of Montreal (BMO) with other big names reporting this week including Kroger (KR), Dollar General (DG), Salesforce (CRM), and Hewlett Packard Enterprise (HPE) among others. Only Toronto-Dominion is expected to see a rise in earnings-per-share compared to its year-ago quarter among the Canadian banks. Meanwhile, only Salesforce is expected to see a dip in earnings-per-share among the other big names.

Economic Events this Week

Tuesday

- 10:00 ET - Consumer Confidence

Wednesday

- 8:15 ET - ADP Employment Change

- 10:30 ET - EIA Crude Oil Inventories

Thursday

- 08:30 ET - Initial & Continuing Claims

- 08:30 ET - Personal Income & Spending

Friday

- 8:30 ET - Nonfarm Payrolls

- 8:30 ET - Average Hourly Earnings

- 8:30 ET - Unemployment Rate

Earnings Reports This Week

Monday:

After the bell:

ARWR, AZEK

Tuesday:

Before the bell: BNS, BILI, BZUN

After the bell: HPE, INTU, NTAP, WDAY

Wednesday:

Before the bell:

BEKE, RY, HRL, WOOF, DCI

After the bell:

CRM, PVH, VSCO, SNPS, SPLK, PSTG, FIVE

Thursday:

Before the bell: KR, TD, DG, BMO, CM, PDCO, BIG

After the bell:

ULTA, MRVL, VEEV, ZS, PATH, ZUMZ

Friday:

Before the bell:

CBRL, GCO

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