Stocks rose higher, with the S&P 500 climbing its a new high for the year, after fresh economic daa signaled cooling inflation and a strong consumer, adding evidence that the U.S. economy is experiencing a "soft-landing" from the coronavirus pandemic's impact. The broader market index rose 0.4% to reach its highest level since March 2022, while the Dow Jones Industrial Average added 130 points and the Nasdaq Composite gained 0.45%.
Here's how the market settled to close out the week:
S&P 500 Index
Dow Jones Industrial Average
Nasdaq Composite Index
In the spotlight, the U.S. economy added 199,000 jobs in November, the Labor Department reported on Friday, coming ahead of economists estimates for 190,000 and above October's print of 150,000. Moreover, the unemployment rate declined to 3.7%, below forecasts for 3.9%, as the labor participation rates ticked higher to 62.8%.
Some traders took the data as a sign that the U.S. economy is experiencing a soft landing, or a stable recovery as inflationary pressures subside. On the other hand, traders are also concerned that inflation may be too high for how well the economy is performing, which may prompt the Federal Reserve to continue to hold interest rates at a higher rate for longer than preferred.
Separately, the University of Michigan's consumer sentiment survey rose to 69.4 in its preliminary reading for December, its highest level since July. Beneath the headline, consumer's one-year outlook for inflation fell to 3.1%, down from 4.5% in November, while the five-year outlook declined to 2.8% from 3.2%.
"Consumer sentiment soared 13% in December, erasing all declines from the previous four months, primarily on the basis of improvements in the expected trajectory of inflation. Sentiment is now about 39% above the all-time low measured in June of 2022 but still well below pre-pandemic levels," said Joanne Hsu, director of Surveys of Consumers, in a statement.
"There was a broad consensus of improved sentiment across age, income, education, geography, and political identification. A growing share of consumers-about 14%-spontaneously mentioned the potential impact of next year's elections. Sentiment for these consumers appears to incorporate expectations that the elections will likely yield results favorable to the economy," Hsu added.
Friday's strength helped lead all three major averages to end the week higher, with the S&P 500 rising 0.2%, while the Dow finished above a positive flatline -- both indexes posted their sixth week with gains, marking their longest such streak since 2019. The Nasdaq also climbed 0.7% higher this week.
For next week, market participants will focus on the Fed's next and last policy decision of the year due out Wednesday afternoon, followed by remarks by Fed Chair Jerome Powell.
