SPY jumps by almost 2%
The SPDR S&P 500 ETF (SPY) and the Direxion Daily S&P500 Bull 3X ETF (SPXL) surged by 1.95% and 5.79%, respectively, on Friday, December 4, 2015. The day was very important because it saw the release of the crucial US employment report, which was being eyed by many US investors ahead of the Fed’s December meet. The jobs report was the most important—as well as the last—economic indicator to be released before the Federal Reserve’s December meet, at which time it will issue its highly anticipated monetary policy decision.
The following graph presents the market’s snapshot as of December 4, 2015.
Here the US dollar is represented by the PowerShares DB US Dollar Index Bullish Fund (UUP), whereas oil is represented by the United States Oil Fund (USO), and gold is represented by the SPDR Gold Trust (GLD). The treasury bond market is represented by the iShares 20+ Year Treasury Bond (TLT) while volatility is represented by the Volatility S&P 500 (VIX).
Now let’s look at the economic data released as well as at implications and subsequent market responses.
The US employment situation showed solid growth for the two consecutive months, October and November 2015. According to the report released by the US Labor Department for November 2015, the non-farm payrolls came in at 211,000, compared to the consensus estimate of 190,000, whereas the unemployment rate remained unchanged at 5%.
This upbeat economic data bolstered the probability of a rate hike in December 2015. Such clarity about the Fed’s impending monetary policy move lifted the US stocks across all the sectors, particularly the financial and the financial services sector. These stocks included Charles Schwab Corporation (SCHW), CME Group (CME), Assurant (AIZ), General Growth Properties (GGP), and Intercontinental Exchange (ICE), whose stocks went up by 4.6%, 4.4%, 4.3%, 4.1%, and 4.1%, respectively, on December 4.
Now let’s check out the sector performances of the component sectors of the SPDR S&P 500 ETF (SPY) on December 4.