This week, the four major market indexes began the week with declines but ended with a strong finish on Friday. In corporate and economic news, the week was relatively quiet, with better-than-expected inflation data and slightly better-than-expected jobless claims numbers. The market received a boost on Friday in part from tech giants Oracle and Nvidia. Oracle announced that it is one of the investors set to lead TikTok’s U.S. operations, preventing TikTok from having to shut down its app in the U.S. over national security concerns. Nvidia's stock also rose on Friday after a report indicated that the chipmaker is close to receiving U.S. permission to sell H200 AI chips to China. As we approach the end of the year, the Santa Claus Rally is in play. This rally spans seven days, beginning in the last week of December, and has averaged a return of 1.3% since 1950.
In corporate news, Nike stock made headlines today as the company beat earnings estimates but announced weaker-than-expected guidance for next year. A large portion of their growth slowdown is due to weak sales in China, as analysts say the brand is losing its cultural appeal among Chinese consumers. This earnings report comes just over a year after Nike named Elliott Hill as their new CEO. His turnaround vision for the company includes several strategies, such as diversifying their product line, strengthening their consumer connection, and realigning their teams and leadership. Another news story is the unfolding of who will emerge as the acquirer of Warner Bros. Netflix and Paramount have been in a bidding war over the past few months for the company and as of now, Netflix has the upper hand. On December 5th, it was announced that Netflix would be acquiring the company for $82.7 billion. However, Paramount launched a hostile takeover bid this past week by going directly to Warner Bros.' shareholders. The latest plot development occurred on Wednesday, when Warner Bros. defended its decision, arguing that Netflix’s deal offers more value than Paramount’s. The next important date in the bidding war is January 8th, when Paramount’s tender offer is set to expire.
In economic news, the U.S. employment report was released on Tuesday and reported that employers added 64,000 jobs, beating the forecast of 45,000. The report also announced that the unemployment rate increased to 4.6%, higher than the 4.5% estimate. Although this marks the highest rate since September 2021, it is most likely distorted by the absence of October figures due to the government shutdown. The report also showed a loss of 105,000 jobs in October, most of whom were outside the federal workforce that took buyouts earlier in the year. Among the sectors that added the most jobs were health care, adding 46,000, and construction, which added 28,000. The U.S. jobless claims report came out Thursday, showing a decrease of 13,000 to 224,000 initial jobless claims and suggesting a stabilization in labor market conditions. Thursday also saw the November inflation numbers from the Bureau of Labor Statistics come in at 2.7%. However, like the unemployment rate figure, economists say to take this data with a grain of salt due to the lack of data collection during the shutdown period.
In closing, we turn to holiday season shopping. As is typical in most years, shoppers are willing to spend more in December even if this means cutting back in January. Recent data suggests that shoppers are spending more than they originally planned. The average amount is $770, showing a willingness to splurge on gifts and other end-of-the-year spending. Looking into the differences in generational spending patterns gives a clearer picture of the resilient holiday spending. When asked what categories shoppers plan to spend the most on during the holiday season, baby boomers, Gen X, millennials, and Gen Z all have gift cards and groceries as their top two categories. The generation with the most divergent spending habits is no surprise: Gen Z. Based only on Gen Z, 17% plan on spending the most on electronics (average is 13%), 18% on beauty and personal care (average is 11%), and 18% on jewelry and accessories (average is 9%). Overall, holiday spending this year is projected to surpass $1 trillion for the first time.
Ryan Motsinger
