Four More Weeks: What December Will Mean for Stocks
Barron's Live
Deep Dive
What is the expected jobs growth for November and how does it compare to October?
The consensus estimate for November is 200,000 jobs added, a significant rebound from just 12,000 jobs added in October. October's low numbers were influenced by hurricanes in the U.S. Southeast and the Boeing strike, which removed 30,000 workers from the workforce.
What is the current unemployment rate and how has it trended recently?
The unemployment rate is expected to tick up to 4.2% in November from 4.1%. It has been bouncing around this level for the past six months, having been at 4.3% as recently as August.
What does the current jobs data imply for the Federal Reserve's interest rate decisions?
The jobs data, combined with upcoming CPI data, will influence the Fed's decision on whether to cut or pause interest rates in December. Currently, futures market odds are about 60/40 in favor of a cut. However, Fed officials, including Chairman Jerome Powell, have indicated no rush to cut rates due to solid economic conditions and firmer inflation readings.
What are the key risks to the stock market heading into 2025?
Key risks include geopolitical tensions, potential changes in fiscal policy under the new administration, and the possibility of a currency crisis if the dollar strengthens further. Additionally, the bond market could react negatively to deficit-increasing policies, potentially leading to a failed treasury auction and market panic.
How has Elon Musk's relationship with Donald Trump impacted Tesla's stock?
Tesla's stock has added about $300 billion in market value since the election, partly due to Elon Musk's close ties with President-elect Donald Trump. Investors believe the Trump presidency could benefit Tesla through lower taxes, proximity to the president, and potential federal standards on self-driving cars.
What is the outlook for Tesla's stock given its current valuation?
Tesla's stock is considered frothy, with a significant portion of its valuation tied to future opportunities like self-driving cars and robots. Analysts suggest that Tesla could be fairly valued at around $200 per share for its core businesses, with the rest of the stock price reflecting speculative future growth. The stock has rallied post-election, but earnings estimates for 2025 and 2026 have not changed, indicating that the stock has become more expensive.
What are the expectations for Salesforce's earnings and its focus on AI?
Salesforce is expected to beat and raise its earnings guidance, with a focus on AI and large language models (LLMs) to improve workflows. The company recently hosted a major AI event called Dreamforce, signaling its commitment to AI-driven growth. The stock is up about 26% year-to-date and trades at 30 times 2025 adjusted earnings.
Why are Dollar Tree and Dollar General struggling despite economic conditions favoring discount retailers?
Dollar Tree and Dollar General are struggling due to rising costs related to labor and transportation, as well as a shift in consumer preference towards value retailers like Walmart and Costco. Both companies have moved away from the $1 price model, leading to customer sticker shock and declining earnings. Dollar Tree is also dealing with the fallout from its acquisition of Family Dollar, which has not performed well.
What is the outlook for Apple's stock given its position in the AI race?
Apple's stock is trading at a record high, but it is considered expensive at 32 times calendar 2025 earnings. The company has been a latecomer to the AI race, relying on outsourcing AI expertise rather than aggressively investing in its own AI technologies. This contrasts with competitors like Microsoft, Amazon, and Alphabet, which are heavily investing in AI.
What stock would you hold for the next five years?
Al recommends Alphabet, citing its investment in AI and potential for long-term growth despite current sentiment being at a trough. Nick suggests SPY, the S&P 500 ETF, as a high-confidence option given its historical performance over five-year periods.
- Consensus estimates for 200,000 jobs added in November
- Unemployment rate expected to tick up to 4.2%
- Messy reports due to hurricanes and Boeing strike
- Overall job market trend is cooling, but still strong
- Fed's decision on December meeting (cut or pause) will depend on jobs report and CPI data
- No rush to cut rates, according to Fed officials
- Outlook for 2025 suggests higher growth and inflation, slowing rate cuts
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