December 4th Market Overview

Happy Wednesday everyone.

Is the green ever going to stop?

The market is extending its bull-riding momentum into December, with major indices touching fresh record highs.

Despite a cooling job market and a slowing services sector, early holiday shopping data show encouraging trends. Black Friday traffic exceeded expectations.

A personal ask from me - each time someone checks out today’s sponsor it buys me a sip of coffee.

Let's dig in...

Executive Summary

• Major indices hit fresh record highs, led by tech and AI-related stocks
  

• Private sector jobs data shows cooling labor market with 146,000 jobs added vs 163,000 expected
  

• Fed Chair Powell emphasizes data-dependent approach, citing economic strength
  

• Black Friday traffic exceeded expectations, down only 2% YoY vs anticipated 8% decline
  

Market Overview

All major indices posting solid gains today.

Key Market Drivers

1. Tech Earnings Excellence: $CRM and $MRVL deliver substantial earnings beats, highlighting strong AI adoption
   

2. Labor Market Cooling: ADP data shows slowing job growth, particularly in manufacturing sector
   

3. Services Sector Slowdown: ISM Services PMI dropped to 52.1 from 56.0, below expectations of 55.6
   

4. Retail Momentum: Early holiday shopping trends show strong consumer engagement, with 45% of shoppers starting before November

Stock Spotlight

• $CRM ▲ 9%: Q3 revenue hit $9.44B vs $9.35B expected, with subscription revenue up 9.1% YoY
  

• $MRVL ▲ 24%: Q4 guidance of $1.8B vs $1.65B expected, driven by AI and cloud demand
  

• $PURE ▲ 21%: Secured major tech company contract, upgraded to overweight by Piper Sandler
  

• $ROKU ▲ 11%: Needham suggests potential acquisition premium in 2025
  

• $DLTR ▲ 4%: Beat Q3 expectations, announces CFO transition

Big Name Updates

• $NVDA: CFO reports strong demand continuing, Blackwell supply constraints extending into next fiscal year
  

• $AMZN: AWS announces “Ultracluster” AI supercomputer, JPMorgan maintains as “best idea”
  

• $NFLX: Reaches 10M subscribers in Japan, doubles subscriber base in 4 years
  

• $LLY: Zepbound outperforms competition in obesity treatment trials

Other Notable Company News

• $GM: Taking $5.3-5.6B charge for China business restructuring
  

• $CMG: Implementing 2% price increase across 20% of locations
  

• $JBLU: Raises Q4 outlook on stronger holiday bookings
  

• $PLTR: Integrating with Amazon Nova Pro for enhanced AI capabilities

Sector Watch

Bond Market

Treasury yields show mixed movement following services sector data, with the 10-year settling at 4.192% and 2-year at 4.136%. BlackRock maintains an underweight position on long-term Treasuries, citing high U.S. debt and uncertain fiscal policies.

Policy Watch

Markets are focused on Powell's latest comments. They imply a cautious approach to policy changes due to economic strength.

The ISM (Institute for Supply Management) Services PMI (Purchasing Managers' Index), a key monthly survey, dropped to 52.1 from 56.0. Readings above 50 indicate expansion.

The ISM Services report reveals that businesses worry about two things: proposed tariffs and their impact on industries. Manufacturing managers expect growth but cite tariff uncertainty clouding their outlook.

What to Watch

1. Friday’s Jobs Report (Non-Farm Payrolls):

• Consensus expects 214,000 jobs added

• BofA notes results may be distorted by reversal of storm and strike impacts

• Key indicator for Fed’s next policy moves

2. AI Infrastructure Developments:

• $NVDA and $TSM accelerating next-gen platform development

• Cloud providers expanding AI computing capacity

• Supply chain constraints impacting timeline

3. Holiday Retail Performance (these are just fun insights):

• Early shopping trends exceeding expectations

• Barbie remains top toy for girls

• LEGO dominates boys’ category

• Promotional environment intensifying

P.S. 

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Thanks for reading 🙂

- John