So Much Data, So Little Signal. If there is one word that sums up the day, it’s mixed. The economic data were muddled. Stock performance, ho hum. And the outlook for the rest of the week? Cloudy.

The Nasdaq Composite managed to eke out a 0.2% gain after being down as much as 0.6% earlier in the day. The S&P 500 fell 0.2% and the Dow Jones Industrial Average shed 302 points, or 0.6%.

The slump seemed to hinge on an economic data dump that proved a mixed bag, at best. The rise in unemployment (more on that below) likely spooked investors and caused some jitters amid weak market breadth.

Consumer spending fell flat in October, but that was largely due to one number: weak car sales.

Some of the underlying data, signaled that it might be too early to count the American consumer out. The biggest positive was the fact that the control group—an indicator that excludes volatile categories like auto dealers, gas stations, building materials, and food services rose by 0.8% month over month in October. That figure is important because it feeds into inflation-adjusted gross domestic product growth.

The negative offset is that spending at restaurants and bars—the other component of retail sales that is used to calculate real GDP—declined by 0.4%. And that was on top of downward revisions to September growth.

“Today’s data flow was a wash. Every data point, whether hawkish or dovish, had a caveat,” writes Bank of America’s economics team. “On balance, we think the Fed is well positioned to wait for Dec data before making its policy decision.”

The Hot Stock: Comcast Corp. +5.4%
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Tuesday finally delivered the much-delayed jobs data, but boy was it noisy. The release from the Bureau of Labor Statistics contained more caveats about the data being less reliable than actual information. Usually after big events like a hurricane, the BLS includes a little callout box that outlines the potential pitfalls. Today’s data came with six (!) such callouts.

Overall, the November employment data show the U.S. labor market is still managing to hold on—though hiring remains soft and federal layoffs have weighed heavily on job growth in recent months. Unemployment—the key data point in focus—also proved troubling.

The jobless rate edged up to 4.6% in November, the highest level since 2021. That was above the consensus estimate and higher than September’s 4.4% rate—the last recorded level since October data couldn’t be produced retroactively.

But there’s no reason to panic over the jump, in large part because it was driven by Americans who were coming off the sidelines and re-entering the labor market in hopes of finding a job.

“Large swings in the teen unemployment rate aren’t uncommon, so it would not be at all surprising to see this reverse course in December,” writes Omair Sharif, founder of the research firm Inflation Insights.

Paired with other indicators such as the low level of jobless claims, receding layoff announcements, and a boost in job openings in recent months, the labor market doesn’t appear to be collapsing.

Monthly payrolls also advanced by 64,000 in November, with private sector employment showing continued momentum after a weaker summer. And that momentum seems to be sustained. For the four weeks ending Nov. 29, ADP reported today that private employers added an average of 16,250 jobs a week.

Bottom line, the BLS made it clear Tuesday that caution is warranted in analyzing the latest data—due to lower survey response rates, weighting changes, and nontypical lookback periods. That’s all thanks to the effects of the government shutdown on the collection and processing of the latest data.

As a result, Fed officials likely won’t put too much weight on Tuesday’s data. Instead, policymakers are likely to prioritize the December jobs report, which will be released Jan. 9. The Fed holds its next rate-setting meeting on Jan. 27-28.

“Overall, the report contains enough softness to justify prior rate cuts, but it offers little support for significantly deeper easing ahead,” writes Kevin O’Neil, associate portfolio manager and senior research analyst with Brandywine Global. “With labor market signals sending mixed messages, the next inflation reading may become the primary driver for markets as we enter the new year.”

General Mills, Jabil, and Micron report earnings tomorrow.

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