U.S. financial market indexes finished higher for the December 5 week after a stronger than expected jobs report on Friday. The Dow Jones Industrial Average finished the week at 17,958.79, up 0.72%. The S&P 500 was also higher for the week, closing at 2,075.37 with a gain of 0.38%.
The November jobs report from the Bureau of Labor Statistics showed an increase in nonfarm payroll jobs of 321,000 for the month. The report greatly exceeded economists’ consensus estimate which called for an increase of 230,000 jobs. The unemployment rate held steady at 5.8% down from 7.0% in November 2013.
November’s surprisingly strong employment data report could affect the Federal Open Market Committee’s outlook on the economy and furthermore, decisions on the timing of a rate increase. Employment data is a key factor influencing the FOMC’s monetary policy decisions. In its most recent economic projections the FOMC tightened its range for the unemployment rate in 2015, moving the range from 5.4% to 5.7% in its June projections to 5.4% to 5.6% in its September projections. According to the projections, fourteen members of the FOMC called for policy firming in 2015 and the FOMC’s midpoint range estimates for the federal funds rate in 2015 spanned from 0.25% to 2.75% in 2015.
The FOMC’s projection estimates indicate that the FOMC is already factoring in strong employment growth in the U.S. economy. Market-based measures have reportedly shown a rate increase occurring in mid to late 2015. The strong November jobs report and continued strengthening in subsequent employment reports would likely lead to a rate increase occurring earlier in the second half of 2015.
S&P 500 sectors with the greatest gains for the week included the financial sector up 1.72%, healthcare sector up 1.70% and the materials sector up 1.24%. In the DJIA, financial stocks JPMorgan Chase (JPM, Financial) and Goldman Sachs (GS, Financial) led the index’s return for the week.
