Bond Yields And Volatility Raise Concerns as S&P 500 Nears Milestone

November jobs report beats forecasts as markets await inflation data and Fed updates

• The November jobs report exceeded expectations, highlighting strong gains in the leisure and transportation sectors.
• Strong earnings reports from DocuSign, Lululemon, and Ulta signal continued resilience in key market segments.
• Upcoming inflation data and the odds of a Fed rate cut are shaping market sentiment.

It’s been a relatively quiet week for stocks, marked by minimal price movement and low trading volume. Yesterday, the S&P 500 and Nasdaq Composite each declined by less than 0.2%, while the Dow Jones Industrial Average fell 0.6%. The Russell 2000, which tracks small-cap stocks, saw the largest drop, falling over 1%.

Overall, trading volume remained at some of the lowest levels seen this year. Markets are now looking to today’s employment report for potential catalysts.

The November employment report exceeded expectations, showing 227,000 new jobs added, compared to the forecasted 202,000, with the unemployment rate holding steady at 4.2%. Leisure and hospitality led job growth, with transportation equipment manufacturing also contributing as striking workers returned to the workforce. In addition, upward revisions for September and October added a combined 56,000 jobs.

Later today, the consumer sentiment report is due, and its results could help explain the S&P 500’s 5% rally since the election. Investors will also be paying close attention to speeches from three Federal Reserve members, seeking hints on monetary policy ahead of this month’s Federal Open Market Committee (FOMC) meeting. Currently, there’s a 72% chance of a 0.25% rate cut, according to the CME Fed Watch Tool.

Stocks exceeding expectations

In earnings news, DocuSign (DOCU) delivered strong results, beating forecasts and providing positive forward guidance, pushing its stock 13% higher in premarket trading. Lululemon (LULU) also posted impressive quarterly results, outperforming expectations on both revenue and earnings. However, the company noted slowing U.S. sales, offset by strong international performance. Shares are up 9% in premarket trading. Ulta Beauty (ULTA) exceeded expectations and raised its full-year guidance, driving a 12% gain in premarket trading.

On the corporate front, Airbus (EADSY) announced plans to lay off 5% of its space and defense workforce—approximately 2,000 employees—as part of an effort to improve productivity. Meanwhile, crude oil prices fell by about 1% in premarket trading after OPEC+ decided to delay production cuts by three months.

Next week’s data and earnings announcements

Looking ahead to next week, key earnings reports will include Oracle (ORCL) on Monday, Adobe (ADBE) on Wednesday and Costco (COST) on Thursday. Investors will also closely watch inflation data, with the consumer price index (CPI) and producer price index (PPI) scheduled for release on Wednesday and Thursday, respectively.

Although futures saw a slight lift following the employment report, the market remains cautious. The S&P 500 is near 6,100, while the Nasdaq Composite is approaching 20,000. Despite those milestones, persistent high bond yields and elevated volatility indicators signal potential challenges. As the end of the year approaches, it’s a good time for investors to review portfolios and stick to long-term plans.

JJ Kinahan is CEO of IG North America—which includes tastylive, tastytrade and IG's FX Business. Kinahan traded for 21 years at the Chicago Board Options Exchange. He serves on the CBOE Advisory Board and the SIFMA Options Committee. @thejjkinahan

For live daily programming, market news and commentary, visit tastylive or the YouTube channels tastylive (for options traders), and tastyliveTrending for stocks, futures, forex & macro.

Trade with a better broker, open a tastytrade account today. tastylive, Inc. and tastytrade, Inc. are separate but affiliated companies.