December 3, 2021

Jittery investors sold stocks again today after a much weaker than expected jobs report from ADP showed only 210k jobs created in November vs. expectations for 550k. However, other economic data saw October Factory Orders rising +1.0% vs. +0.5% estimated and the ISM Services PMI at 69.1 vs. 65 consensus and increasing for a second straight month. Earnings were mixed with chip maker Marvell Technologies (MRVL) jumping +17.68% after beating and raising guidance, while cloud software company DocuSign (DOCU) lost -42.22% after missing and cutting forward guidance. The major averages tanked at the opening bell and traded below key support levels in across the board selling but managed to crawl off the lows the last hour of the day with the Dow Jones nearly making it back to the breakeven line. Funds diverted to defensive sectors and Consumer Staples (XLP), Utilities (XLU) and Healthcare (XLV) finished the session with marginal gains, while growth sectors Consumer Discretionary (XLY) and Technology (XLK) were the weakest market groups. Financials (XLF) were also sharply lower as yields nudged lower and the 30-year Treasury yield hit a one-year low settling at 1.68%. The DJIA was off by about 375-points before buyers came off the sidelines and finished down 59.71 points (-0.17%) at 34580.08. The S&P 500 slipped 38.67 points (-0.84%) to 4538.43, while the NASDAQ lost 295.85 points (-1.92%) finishing at 15085.47. The small cap Russell 2000 again underperformed down -2.13%.

Breadth was negative with declining issues beating advancing issues 2.6:1 on the NYSE and 3.4:1 on the NASDAQ. Declining volume was 75% on the NYSE and 76% on the NASDAQ. The VIX jumped 2.72 (+9.73%) and closed at 30.67. Crude oil prices eased 0.26 (-0.39%) and the January contract closed at $66.24 a barrel. Gold prices jumped 21.30 (+1.21%) and finished at $1784.00 an ounce. Bitcoin (BTC) ended the session at $53,900.

Although key moving average support levels were violated early the major averages (MA) were able to climb back above some support levels at the close. The DJIA finished back above its 200-day MA, while the S&P 500 and NASDAQ reclaimed their respective 100-day MA. On a technical basis that could give traders something to build on Monday. However, market direction will be entirely tied to weekend headlines about the Omicron variant and whether it will cause more shutdowns in global economies. If the news shows the virus is somewhat contained equities could stage another reversal to start the week after finishing this week in very a very oversold condition.

Earnings releases to watch for on Monday include: Coupa Software (COUP), DLH Holdings (DLHC), Health Equity Inc (HQY) and Science Applications International (SAIC).

Monday’s Market Moving Economic Calendar: T-Bill Auctions.

By David L. Blake, CMT