• The Dow rose on Friday thanks to blockbuster jobs growth but will likely close the week in the red.
  • China announced it would wave trade war tariffs on US soybeans and pork.
  • The move presents Trump with a dilemma as a new trade deal deadline approaches without a firm agreement.

The Dow accelerated its previously-cautious recovery on Friday, but the US stock market is on track to close the first week of December in the red.

Tariff concessions from China provided the spark, while a fantastic November jobs report added fuel to the fire.

Dow Accelerates Recovery

The Dow Jones Industrial Average may still record a weekly loss, but today’s 0.86% surge erased the bulk of the index’s early-week plunge. The Dow last traded at 27,914.58 for a session gain of 236.79 points.

The Dow extended its recovery, erasing the bulk of its weekly losses. | Source: Yahoo Finance

The S&P 500 jumped 0.8% to 3,142.37, while the Nasdaq raced 0.82% higher to 8,642.46.

The gold price plunged more than 1%, as investors found little reason to hide in risk-off assets.

Blowout Jobs Report Sends Stock Market Into Overdrive

The Dow and its peers shot higher this morning after the November jobs report exceeded Wall Street’s wildest expectations.

Traders anticipated strong data, largely because the end of the GM strike promised to inflate the statistics a bit. Economists expected nonfarm payrolls growth of 187,000, but the economy delivered 266,000 new jobs – the highest total since January.

november jobs report, stock market impact
The November jobs report smashed expectations. | Source: Trading Economics

The unemployment rate unexpectedly declined to 3.5%, matching its best reading of 2019 – which is also the best reading since 1969.

Commenting on the blowout jobs report, ING Chief International Economist James Knightley urged Dow bulls to temper their expectations. ING has already predicted that US GDP growth will lag the consensus forecast, and he warns that this will soon be reflected in weakening payroll gains.

He writes,

Despite today’s blowout number, the US economy is experiencing a slowdown and we expect this to be reflected in weaker payrolls gains in coming months. The weak global growth environment… has prompted a more cautious attitude from US business and already resulted in two consecutive quarters of falling capital expenditure.

China Delivers Trump a Key Trade War Concession…

The jobs report launched the recovery into overdrive, but stocks initially rose because China’s finance ministry revealed that it would waive retaliatory tariffs on US soybean and pork imports.

Those tariffs had been designed to inflict maximum pressure on President Donald Trump by targeting one of his key voting blocs, farmers.

These agricultural tariff waivers deliver Trump a coveted concession (while also serving Beijing’s interest), but they also paint him into a corner. Less than two weeks before new tariffs kick in on Dec .15, it appears unlikely that the US and China will strike a trade deal before the deadline. Those tariffs would target $156 billion worth of consumer goods, including big-ticket electronics like smartphones.

That Also Backs the White House into a Corner

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