November’s sought-after nonfarm payrolls report has officially arrived. And while it may feel inconclusive to some, in our view, it broadly suggests that stocks should keep on rallying into the end of the year.
That is, we think this was the perfect “Goldilocks” jobs report. It wasn’t hot enough to create reinflation fears, nor was it cold enough to stoke lingering concerns about an incoming recession. Rather, it was the perfect temperature.
There was good news. For example, the U.S. economy added 227,000 jobs in November – better than the 215,000 expected. Clearly, hiring remains stable nationwide.
However, this jobs report included bad news as well. The unemployment rate crept up to 4.2%, higher than economists’ expectation that it would remain flat at 4.1%. In truth, unemployment has been creeping higher for the past year but improved in the late summer. The fact that it is increasing once again does suggest some weakness in the labor market.
So, in other words, today’s jobs report was a mixed bag. There was good news, and there was bad news.
But that’s exactly what stocks need to keep pushing higher.
Why We View This Jobs Report as Bullish
If November’s jobs report were red-hot, with robust growth and falling unemployment, it would certainly have created more reinflation worries. Not to mention, it also would’ve axed odds that the Federal Reserve would cut rates at its meeting in two weeks.
Meanwhile, an ice-cold report with weak growth and rising unemployment would’ve reignited fears about a potential recession.
But a just-right “Goldilocks” jobs report – with good growth and rising unemployment – simultaneously supports another rate cut and keeps reinflation and recession fears at bay.
Thankfully, we got that “just-right” report. And the markets are reacting exactly as you would expect.
Following the data’s release, odds for a December rate cut jumped from 70% to 90%. The 10-year Treasury yield sank to a post-election low. And the Dow Jones, S&P 500, and Nasdaq all rallied in early morning trading.
Wall Street got the jobs report it wanted. Now stocks are celebrating the holidays early.
We think this stock market has runway to keep pushing higher into the end of the year. Furthermore, we also think stocks have the fundamental support to achieve another very strong year in 2025.
But we caution folks against getting too greedy or too bullish in the current market boom.
The Final Word
Every stock market boom eventually ends in a bust. And this particular boom has some eerie parallels.
That is, the S&P is currently on track to notch back-to-back years of 20%-plus gains. It has only done that three times before: in 1935/36, 1954/55, and 1995/96.
And the table below details exactly what happened next…
All booms of this nature turn into busts. It is simply a matter of when.
But, that being said, an inevitable crash is no reason to dump your stocks and throw in the towel.
Despite the ever-changing economic landscape, plenty of investors find success in the markets. Some focus on fundamentals, closely analyzing a company’s sales and profit growth to find their future winners. Others look at a stock’s technical setup, assessing the slope of moving averages and day-to-day price action. And then, of course, there’s market sentiment to account for. What’s the trading volume like? Do folks sound bullish or bearish on social media?
Each can play an important role when it comes to a successful investment strategy. And combined, these factors can help you to create a nearly unstoppable portfolio.
As it happens, that’s exactly what we aim to do with our latest investment tool: Auspex. By combining fundamental, technical, and sentimental analysis, this tool has consistently demonstrated its ability to identify breakout stocks before their explosive growth phases.
In fact, it has beaten the market every single month since we started live testing it in July.
As we move beyond the era of simple buy-and-hold strategies, Auspex stands ready to guide investors toward the next generation of market winners, month in and month out.
If you’re looking for a way to outperform the broader market, no matter the economic climate, join my upcoming broadcast next Wednesday, Dec. 11 at 1 p.m., where I’ll be sharing all the details about this powerful new system.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
P.S. You can stay up to speed with Luke’s latest market analysis by reading our Daily Notes! Check out the latest issue on your Innovation Investor or Early Stage Investor subscriber site.
