Weekly Market Outlook – Will Overhead Hurdles Constrain?

Despite Thursday’s severe drubbing (the potential beginning of a bigger meltdown), stocks finished the week on a very bullish note, gaining more than 2.0% on Friday. That was enough to put the market back in the black for the week, even if just barely. The strong finish to last week, however, at least sets a bullish tone headed into the new trading week.

And yet, none of the key indices have cleared their major technical hurdles that have been in the way for the past month… give or take.

We’ll look at the bullish and bearish arguments below, following a quick look last week and this week’s key economic data.

Economic Data

Last week was loaded with economic news, but the highlight didn’t arrive until Friday… November’s employment report.

It was good. We saw net job-growth of 211,000 jobs. That wasn’t enough to push the unemployment rate down below October’s rate of 5.0%, but there are some that feel that particular unemployment rate figure reflects maximum possible employment.

Job-Growth and Unemployment Rate Chart

Source: Thomas Reuters

We also got updates on both of the business survey ISM indices…. the regular “manufacturing” one, and the services one. Both fell last month, and the ISM index broke below 50 — reaching 48.7 — suggestive of a recession.

ISM Index Charts

Source: Thomas Reuters

That one reading of 48.7 is not an official determination of a recession; it takes more than that to push the economy as a whole backwards. But, all recessions start out small.

All the other data is on the following grid:

Economic Calendar

Source: Briefing.com

This week won’t be quite as busy, but we’ll be getting a couple of biggies on Friday… last month’s retail salesand the producer price inflation rate, both for November.

Economists expect to see little change in the producer price inflation rate, with or without oil and food factored in. As a precursor to consumer inflation rates, this suggests the following week’s data on that front will be equally tame.