Watching the markets go up and down is making me feel like a Funko bobble head doll on the dash board of a Ford F150 on a dirt road. Stocks closed a volatile week with a drop of 588 points to 24,388. Trading volume was significantly lower. For the week, the Dow was off 4.4% and for the year is now slightly negative. The support level of 24,200 continues to hold. Headline news and tweets continue to drive volatility.
The November jobs report came in lower than expected with 155,000 new jobs created versus expectations calling for a reading of 198,000. Manufacturing jobs did well and increased by 27,000. The unemployment rate held steady at 3.7% and met expectations. Wages grew at a 3.1% pace over the past year and the labor force participation rate held flat at 62.9%. The overall report was slightly positive at best. Fed watchers think it might get the Federal Reserve to raise rates only a couple of times next year versus the 3 to 4 times they had been expecting.
Jefferies & Co. upped its rating on Tesla from hold to buy with a target price of $450 per share. Tesla’s stock jumped on the news but then faded as the market selloff worried investors. The guru who made the call noted that Tesla has a secure supply of batteries and a product leadership position that “transcends the volume/premium divide”. (whatever that means). Tesla has been cranking out 1,000 Model 3’s per day as of late and is actively working on a gigafactory in China as well as a gigafactory location in Europe. What else is interesting about Tesla is that people in places like Russia and Turkey desire having a Tesla so much they have been buying the cars and shipping them into their country despite tariffs and not having any product support. GM and Ford are not experiencing anything like this.
In the materials and energy space, oil prices were up 1.8% after OPEC announced a 1.2 million barrel per day production cut. In the timber industry the State of Washington changed its building codes and is now the first state in the country to allow “mass timber” high rise buildings up to 18 stories tall. The Random Lengths Framing lumber index went up $1 to $343. Canadian mills are exporting record levels of Doug fir with no signs of letting up on the production rate. Natural gas prices continue to rise and were up 4% today on strong demand and tight inventories.