Weekly Summary: Investors Wait for the Nonfarm Payrolls

The S&P 500 broad market index declined by 0.2% to 4583 points this week, but it remains above the support level at 4540-4560 points. Given some positive news, there's potential for the index to rebound towards the resistance at 4650 points.

This week saw no significant negative news for the U.S. stock market. On the contrary, the Service PMI rose to 50.8 points from the previous month's 50.6, providing some optimism for investors. However, this wasn't sufficient to alter the Federal Reserve's (Fed) monetary stance. The consensus among investors is a likely pause in Fed's interest rates at the upcoming meeting, supported by 97.7% of investors. The probability of the first interest rate cut by the Fed stands at 53.4%.

Major optimism stems from the oil market, where Brent crude prices fell by 6.7% to $73.86 per barrel, the lowest since June 29. U.S. Treasuries' yields also dropped, with the 10-year sovereign debt yields declining to 4.10% from 4.25%. The decline in crude prices supports a slowdown of inflation, prompting further easing of Fed's monetary stance and setting the stage for the anticipated Christmas rally.

Investors are eagerly awaiting the U.S. labour market report due today. The consensus predicts the unemployment level to remain at 3.9%, with Nonfarm Payrolls expected to rise to 180,000 in November from the previous month's 150,000. However, our statistical modeling suggests a more conservative estimate for Nonfarm Payrolls between 150,000 and 180,000. Both estimates are above 103,000 calculated by ADP. The unemployment has equal chances to remain at 3.9%, and to edge higher to 4.0%.

If U.S. labour market cooling would be at maximum estimated then Christmas rally matter may be regarded as closed. Even the Fed could not alter a positive sentiment of the market next week. Thus, the labour market report is very important this time. The market reaction to the report is anticipated to be significant.

Technically, the S&P 500 index has passed a potential reversal period and entered a secure territory. The benchmarks is accommodating itself well to make a new movement. The weekly resistance is located at 4650 points. The nearest support is at 4540-4560 points. Weaker than expected U.S. labour market report could send the benchmark towards 4650 points.

OPEC+ seems to be losing ground despite an additional 1 million bpd production cut. Crude prices are decreasing, contrary to the usual trend following such cuts. Typically, such cuts resulted in a 30% rise of crude prices in the following months. This time a consolidation of Brent crude prices below the resistance at $83.00-85.00 per barrel translated into a decline towards the nearest support is at $74.00-76.00 per barrel. The next support is located at $65 per barrel. Leaders of Saudi Arabia and Russia may have discussed this matter during their recent meeting.

Gold prices are moving inside the mid-term upside formation with targets at $2000-2100 per troy ounce that have already been met. Prices broke through the resistance at $2100 per ounce to $2141 level and rolled backed to the nearest support is at $1990-2010 per ounce. Prices are rolling back pushed down by a technical weakness period that will last by mid-January potentially leading gold prices below $2000 per ounce.

The Greenback moved lower its primary correction targets at 1.08500-1.09500 against the Euro to 1.07800. Further correction is tied to the prospect of a Christmas stock rally. In this scenario, the EURUSD may rise towards 1.12000-1.13000. Alternatively, the Greenback could resume its strengthening towards parity with the Euro.