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US Stock Market Overview – Stocks Rally Despite Weak Jobs and Services Data

David Becker

US stock prices moved higher on Wednesday rebounding from a 2-day slide as President Trump reversed his commentary on Tuesday and said negotiations with China are moving along. US private jobs data came out softer than expected, which points to a potentially weaker government report this Friday. On the heels of softer than expected ISM manufacturing the services ISM report also disappointed. United Airline announced that it placed an order for 50-planes with Airbus. All sectors were higher, led by a rally in Energy shares, materials were the worst-performing sector in the S&P 500 index. Oil prices surged more than 4% driving up energy shares, following a large than expected draw in crude oil inventories according to Wednesday’s report from the Department of Energy.

Jobs Data Disappoints

US private payroll data which is generally viewed a prelude to the government report showed decelerating private jobs growth according to ADP and Moody’s Analytics. Private employment slowed in November, with payrolls increasing by just 67,000. The number was well below expectations that private jobs would increase by 150,000. This comes ahead of Friday’s government payroll report which is forecast to come in at 187,000 jobs.

November’s jobs growth was a sharp decline from the 121,000 in October, which was revised down from an initially reported 125,000. Goods-producing industries lost 18,000 jobs for the month. Trade, transportation and utilities, a sector that often leads job creation, saw a 15,000 loss, while information services also declined by 8,000. Small businesses also had a poor month, as firms with fewer than 20 employees saw a drop of 15,000 workers.

Services Data Disappointed

On the heels of Monday softer than expected manufacturing data, service data fell in November according to the Institute for Supply Management. The ISM reported that its non-manufacturing activity index fell to a reading of 53.9 in last month from 54.7 in October. While still in expansion territory relative to manufacturing which is contracting, the decline shows a similar theme seen in jobs and manufacturing. Service accounts for more than two-thirds of U.S. economic activity. Expectations were for the index to come in at 54.5 in November.

Big News in the Airline Space

United announced that it placed an order for 50 A321XLR airbus plane which will be replacing the Boeing 757. Boeing does not have a replacement for this plane. Since Boeing has been focused on handling the backlash for the 737 MAX. The backlash has had a snowball effect which has reduced its outreach.

This article was originally posted on FX Empire