The S&P 500 and Nasdaq Composite rose to fresh records on Friday, with the S&P 500 climbing 0.25% to 6,090.27 and the Nasdaq advancing 0.81% to 19,859.77. The Dow Jones Industrial Average slipped 0.28% to close at 44,642.52. The gains came after the release of November jobs data, which showed a 227,000 increase in nonfarm payrolls, above the estimated 214,000. The unemployment rate nudged up to 4.2%, as expected.
Despite the strong jobs report, traders are still expecting the Federal Reserve to cut interest rates again later this month. Fed funds futures trading data reflected an 85% likelihood of a rate cut, according to the CME Group’s FedWatch Tool. Analysts believe that the labor market is softening, but not weak, and that this will give the Fed the cover it needs to lower rates.
“It’s not gangbusters, but we’re doing reasonably solid from an economic perspective and yet there is enough of a softening on the labor side to give plenty of air cover for the Fed to lower rates here,” said Luke O’Neill, portfolio manager at Catalyst Funds. Fed Chair Jerome Powell has previously said that policymakers do not need to be “in a hurry to lower rates,” given the continued strength of the U.S. economy.