Market Review: December 04, 2024

Wednesday's economic data highlighted slowing momentum in the services sector and weaker job growth, while factory orders indicated a modest recovery. Meanwhile, crude oil inventory data showed a significant drawdown, reflecting tightening supply, which supported the energy market.

Event Highlights:

1. ADP Nonfarm Employment Change (Nov):
   Job creation slowed to 146K, falling short of the forecast and prior levels, signaling a cooling labor market.
   
   
2. ISM Non-Manufacturing PMI (Nov):
   The services PMI dropped to 52.1, well below the forecast of 55.5 and previous 56, highlighting softer growth in the services sector.
   
   
3. Crude Oil Inventories:
   Crude oil inventories posted a sharp decline of -5.073M barrels, far exceeding the expected drawdown of -1.600M, indicating tightening supply in the energy market.
   
   
4. Factory Orders (MoM) (Oct):
   Factory orders rose modestly by 0.20%, improving from the prior month’s contraction, although slightly below forecasts.

Impact Analysis:

• USD:
  The combination of slower labor market growth and weaker services data weighed on the USD. However, higher ISM prices and tightening crude oil inventories provided some offsetting support.

• Gold:
  Softer economic and labor market data lent support to gold as a safe haven. However, stronger ISM prices and tighter oil markets posed mild headwinds.

• Equity Futures:
  Equities saw mixed signals. Energy stocks likely benefited from tighter oil supplies, while the broader market faced pressure from slower services sector growth and weaker employment data.

The data paints a mixed picture of the U.S. economy, with labor and services showing signs of cooling while factory orders and energy markets highlight areas of resilience. Investors may interpret these signals as a call for caution, particularly as inflationary pressures remain evident in services prices.