Dow Continues Rally, Techs Sock Nasdaq

Charles Schwab: On the Market

Posted: 12/4/2017 4:15 PM EST

Dow Continues Rally, Techs Sock Nasdaq

 

The Dow added to its recent surge, with economic optimism getting a boost from another strong read on domestic business spending, while the Senate's passage of its tax reform bill over the weekend added to the enthusiasm. However, sustained weakness in the tech sector continued to weigh on the Nasdaq. Treasury yields and the U.S. dollar were higher ahead of a busy week of economic reports that will culminate with Friday's nonfarm payroll report, while crude oil and gold were lower.

The Dow Jones Industrial Average (DJIA) rose 58 points (0.2%) to 24,290, the S&P 500 Index lost 3 points (0.1%) to 2,639, and the Nasdaq Composite tumbled 72 points (1.1%) to 6,775. In heavy volume, 987 million shares were traded on the NYSE and 2.4 billion shares changed hands on the Nasdaq. WTI crude oil fell $0.89 to $57.47 per barrel and wholesale gasoline declined $0.05 to $1.69 per gallon. Elsewhere, the Bloomberg gold spot price decreased $4.42 to $1,276.20 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.4% higher at 93.23.

CVS Health Corp. (CVS $72) announced an agreement to acquire Aetna Inc. (AET $179) for $207 per share in cash and stock, valued at about $69 billion, excluding debt. Under the terms of the deal, Aetna stockholders will receive $145 in cash and 0.8378 CVS Health shares for each share owned. Shares of both companies were lower.

Italy's Prysmian SpA (PRYMY $16) announced an agreement to acquire Kentucky-based General Cable Corp. (BGC $30) for $30 per share in cash, for a total value of about $3 billion, including the assumption of debt. Shares of BGC rallied over 35%.

Dollar, rates and stocks gain ground on tax reform and continued robust business spending

Treasuries finished lower, as the yield on the 2-year note rose 3 basis points (bps) to 1.80%, while the yields on the 10-year note and the 30-year bond advanced 1 bp to 2.37% and 2.76%, respectively.
Treasury yields and the U.S. dollar moved to the upside and the stock markets added to last week's strong gains, bolstered by the Senate's passing of its tax reform bill over the weekend. Now the reconciliation process looms as the House and Senate have to find some key areas of compromise before a tax reform bill can go to President Donald Trump's desk for a signature.

Schwab's Vice President of Legislative and Regulatory Affairs, Michael T. Townsend notes in his latest commentary,Tax Reform Bills Progress, but Many Hurdles Remain, negotiations between the House and Senate will likely be extremely challenging, given the differences between the two approaches. For investors, we still think it is too early to take any drastic action. If and when a tax bill passes, there will be time to review the details and amend your tax and financial plans accordingly. Regardless of the outcome of the tax bill, it’s always a good idea to meet with your tax and financial advisors before the end of the year to review your current financial situation and discuss your plans for the coming year.

Factory orders (chart) dipped 0.1% month-over-month (m/m) in October, better than the Bloomberg expectation of a 0.4% decline, and versus September's upwardly revised 1.7% gain. Stripping out the volatile transportation component, orders rose 0.8% and September's 0.7% gain was revised to a 1.1% increase. October durable goods orders—preliminarily reported last week to have dropped 1.2%—were favorably adjusted to a 0.8% decrease, and compared to forecasts of a revised 1.0% decline. Also, nondefense capital goods orders excluding aircraft, a gauge of business spending, were revised higher to a 0.3% decrease from the initially-reported 0.5% decline.

The highlight of the report was the upward revision to the gauge of business spending, which has risen for four-straight months, with an average month gain of 1.3% for the period. This adds credence to Schwab's Chief Investment Strategist Liz Ann Sonders' view that an even sharper recovery could be in the cards for U.S. business capital spending in 2018, while tax reform—if we get it—would be an additional kicker in her article, Takin Care of Business: Several Important Kickers for a Strong Capex Cycle.

Today's release kicked off a busy economic calendar that will continue tomorrow with a look at the all-important services sector in the form of the ISM non-Manufacturing Index, with economists forecasting a slight decline in the reading for November to a level of 59.0 from October's 60.1, as well as Markit's final Services PMI Index for November, expected to post a reading of 54.7, in line with its preliminary report, but below the 55.3 registered the month prior, while the trade balance will round out the day's docket, with the deficit expected to widen to $47.1 billion during October from September's $43.5 billion.

Europe higher on U.S. tax reform, Brexit negotiations in focus, Asia mixed

The European equity markets rallied, with financials a noticeable gainer along with industrials. Bond yields in the region were mostly higher, while the euro declined versus the U.S. dollar on the weekend's tax reform bill passage by the Senate and upbeat U.S. business spending data, which bolstered global economic optimism. The British pound reversed to the downside on the greenback after the meeting between Prime Minister Theresa May and European Commission President Juncker ended without reaching a deal on an Irish border issue. The meeting was highly expected to produce a deal and likely help Brexit talks end a deadlock. With volatility showing some signs of life last week, in his article, Schwab's Chief Global Investment Strategist Jeffrey Kleintop, CFA, tackles the question, Are Stocks too Expensive?, noting that although world stock market valuations are above average, similar valuations have produced double-digit gains over the following 12 months during the past 50 years. Jeff concludes that valuations support a globally diversified portfolio offering the best diversification benefits in 20 years.

Stocks in Asia finished mixed as the markets grapple with the weekend's tax reform bill passing in the U.S. Senate, along with flared-up uncertainty regarding what possible ramifications former U.S. NSA advisor Mike Flynn's guilty plea for lying to the FBI may have for the Trump administration. This news on Friday caused the U.S. stock markets to dip but they held onto solid weekly gains. Stocks in Japan, mainland China and Australia all lost ground, but securities traded in South Korea, Hong Kong and India saw modest gains. Although showing some signs of choppiness, the global stock markets remain nicely higher for the year that has been bolstered by the broadest economic growth in a decade. This is expected to continue in 2018 as discussed by Schwab's Jeffrey Kleintop, CFA, in his article, 5 Reasons Investors Should Give Thanks.

Services PMI readings from across the globe will dominate tomorrow's international economic calendar, with other reports of note to include retail sales from the U.K. and the Eurozone, new home sales from Australia, and industrial production from Spain. In central bank action, the Reserve Bank of Australia will meet, with no change to its benchmark interest rate expected.

Financial Review

Ever-Flowing Streams

Sinclair Noe — December 1, 2017

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Financial Review by Sinclair Noe for 12-01-2017
DOW – .40 = 24,231
SPX – 5 = 2642
NAS – 26 = 6847
RUT – 7 = 1537
10 Y – .06 = 2.36
OIL + .90 = 58.30
GOLD + 5.00 = 1280.60

Cryptocurrency

• Number of Currencies: 1,361
• Total Market Cap: $329,395,864,867
• Volume (24h): $13,578,461,349

Top Cryptocurrencies

	Name	Symbol	Price USD	Market Cap	Volume (24h)	Total Vol. %	Price BTC	Chg. % 1D	Chg. % 7D
	Bitcoin	BTC	10,940.0	$185.18B	$6.82B	50.25%	1	+0.65%	+34.29%
	Ethereum	ETH	462.42	$45.13B	$1.25B	9.22%	0.0428124	+0.41%	+0.52%
	Bitcoin Cash	BCH	1,428.30	$24.71B	$964.91M	7.11%	0.133796	-0.21%	-10.75%
	Ripple	XRP	0.24588	$9.93B	$182.64M	1.35%	0.00002343	+0.77%	+4.93%
	Dash	DASH	777.55	$6.18B	$284.15M	2.09%	0.0728926	+0.76%	+38.64%
	Litecoin	LTC	100.350	$5.41B	$567.91M	4.18%	0.00910838	+0.18%	+28.72%
	Bitcoin Gold	BTG	301.96	$5.24B	$134.55M	0.99%	0.0286029	+0.95%	-18.70%
	IOTA	MIOTA	1.40200	$3.97B	$143.02M	1.05%	0.00013003	-1.61%	+90.63%
	Cardano	ADA	0.130435	$3.43B	$71.66M	0.53%	0.00001206	+11.93%	+366.10%
	Ethereum Classic	ETC	29.2300	$3.07B	$850.97M	6.27%	0.0028576	-0.68%	+50.87%

Markets started the session wobbling between positive and negative; waiting for word on tax legislation. Then a political bombshell dropped. The major averages hit their session lows on the report, with the Dow Jones industrial average briefly dropping 350 points.

Mike Flynn, former National Security Adviser pleaded guilty to one count of lying to the FBI about contacts with Russia’s ambassador. Prosecutors said he consulted with a senior official in Donald Trump’s presidential transition team before speaking to the envoy. Flynn became the first member of Trump’s administration to plead guilty to a crime uncovered by the special counsel investigation into Russia’s alleged attempts to influence the 2016 U.S. presidential election.

The guilty plea is part of a plea deal. The White House said Flynn’s guilty plea on Friday implicated him alone. Ty Cobb, a White House attorney, said in a statement: “Nothing about the guilty plea or the charge implicates anyone other than Mr. Flynn.” If we parse that statement, it is at best, misleading.

Flynn’s testimony will reach into the administration, we just don’t know exactly who will be crushed, and how severe the damage will be. Flynn’s plea agreement stipulates that he’ll cooperate with federal, state or even local investigators in any way Mueller’s office might need. We know that Flynn will testify against senior administration officials.

Speaking in court as part of his plea agreement, Flynn described a series of conversations with the Russian ambassador to the U.S., Sergey Kislyak, in late December as the Trump team prepared to enter the White House. The talks were instigated by a “very senior member” of the Trump transition team. Media reports say that based upon date and location and other factors, that “very senior member” is White House advisor and Trump son-in-law, Jared Kushner.

Flynn said he then asked the ambassador to help delay or defeat a U.N. security council vote. Other senior officials who were involved in that vote include former advisor Steve Bannon, and former chief of staff Reince Preibus.

About a week later, Kislyak reached out to Flynn about sanctions that the Obama administration had just imposed on Russia. Flynn said he called a senior transition team official at Trump’s Mar-a-Lago resort for guidance, before asking Kislyak to moderate Russia’s response, which Russia ultimately did. Then, he told the court, he called transition team members to tell them what had transpired.

Flynn now says he lied to the FBI in January about the conversations, but that he had fully informed the transition team of the talks. The fact that Flynn was operating on behalf of the incoming government represents the first concrete case of Trump’s presidential staff, rather than his campaign team, covering up contacts with Russia.

Flynn’s guilty plea is notable because the former national-security adviser, the closest adviser to the president on the most sensitive issues of defense and national safety, is pleading guilty to a felony committed while he served as national-security adviser. Also, the move puts Mueller’s investigation inside the White House.

Before the Flynn charge, Mueller had charged two former campaign staffers with crimes committed outside of the campaign, and a low-level campaign staffer had pleaded guilty to lying to federal agents about his contacts with Russians during the campaign. Flynn was a top adviser to the president.

Due to his unique ties to both the Trump campaign and the Trump White House, Flynn is particularly well-suited to answer the two central questions in the Mueller probe: Did the Trump campaign knowingly collude with Russia, and did Trump obstruct justice by trying to limit or derail the FBI’s investigation?

And it’s possible that Flynn has even more Russia ties than is publicly known, since there’s already some reporting that suggests we don’t have the full story when it comes to Flynn and Russia.

Just to be clear – the Mueller investigation is working its way up the food chain. And Flynn is a pretty big fish. That means the next catch – the next indictment to come down will be even bigger. The very fact that Flynn was given a plea deal means that he has already provided valuable information to the special counsel’s investigation.

ABC’s Brian Ross reported that Flynn is indeed prepared to testify against President Trump himself — and to say that Trump personally directed him to make contact with Russians. This doesn’t mean that Flynn has evidence of Russian collusion in the election, but it probably gets to obstruction of justice.

If Trump had any knowledge of any kind of criminal liability that Flynn may have had — and he was trying to get Comey to drop the investigation — that essentially seals Mueller’s obstruction case. We still do not know that any laws were broken – innocent until proven otherwise – but we do know that Mueller has assembled a legal dream team, and if any laws were broken, they will uncover the violations.

If this was a normal day, the top story would be a vote on a massive piece of tax legislation. Senator Mitch McConnell, the majority leader, said “we have the votes” and the Senate will begin voting later today on tax legislation.

The Joint Committee on Taxation, the independent tax scorekeeper, announced that even with projected economic growth, the Republican tax bill still would add more than $1 trillion to the deficit over 10 years, throwing a monkey wrench into the works. The committee reported that the tax would grow the economy by just 0.8 percent over 10 years, and still blow a hole in the budget. This is the first dynamic score of the tax bill, meaning it forecasts how the economy will react to the policy.

Republicans are making the argument that huge corporate tax cuts will bring back jobs and investments and massively grow the economy — in other words, that tax cuts would pay for themselves.

They have long called for this kind of scoring. But now, with an estimate much less optimistic than what they’ve been selling to their constituents, they’re ignoring the numbers and going with intuition. They have done no economic analysis to back their fantasy of magical growth in the economy. The committee report should have killed the bill.

What followed was arm twisting and a few heated arguments.  An effort by Senator Bob Corker of Tennessee to include future tax increases to offset the deficit impact of the bill appears to have been rejected by Senate leadership. Lawmakers are now considering reinstating a modified version of the alternative minimum tax on individuals and on corporations.

Arizona Sen. Jeff Flake, a key hold-out, announced just after noon that he would back the plan. Republicans can pass the legislation with 50 members and a tie-breaking vote from Vice President Mike Pence. This leaves Republican leaders a couple of undecideds — Republican Sens. Susan Collins of Maine (nope, she just flipped to a “yes” vote) and Bob Corker of Tennessee — assuming no further changes upset senators who are already backing the bill.

And Arizona Senator John McCain, previously considered a yes vote, has now reportedly moved to undecided. The predicament leadership faces now is similar to the one they found themselves in on health care. If McConnell appeases Johnson and boosts the tax break for pass-throughs (which costs money), he could alienate Corker and Flake who have lobbied to make the tax bill less expensive.

Although Flake looks like he worked a deal to vote yes in exchange for providing protections for DACA recipients.  If he appeases Collins, he could face problems with the Senate bill when it goes to conference with the House.

There was even some communication between the aisles, between Ron Wyden, the Oregon Democrat, and Mitch McConnell. Wyden wanted to know when he’ll see the bill. McConnell: There’ll be “plenty of time to read” it. That’s not exactly specific. But remember this still has to be reconciled.

The Institute for Supply Management said its manufacturing index slipped to a still-strong reading of 58.2% last month from October’s 58.7%.  The latest ISM reflects strong growth among U.S. manufacturers. Readings over 50% indicate more companies are expanding instead of shrinking. And readings near or above 60% are especially robust.

Earlier today, the Census Bureau reported that overall construction spending increased in October. The Atlanta Fed GDPNow model for fourth-quarter GDP growth jumped after the ISM data on manufacturing. The estimate climbed to 3.5% from 2.7%.

In corporate news, shares of Mylan jumped 4.4 percent after a report that Amazon has held preliminary talks with generic drug makers about a potential entry into pharmaceuticals.

Ulta Beauty was among the worst-performing stocks in the S&P 500, falling 4.1 percent after the cosmetics retailer issued weaker-than-expected guidance for the current quarter.

In other headlines on yet another slow news day in DC: Trump plans to declare Jerusalem the capital of Israel during a speech next week. And Rex Tillerson calls reports that White House wants him to resign laughable.

Let justice roll down like waters and righteousness like an ever-flowing stream.

Stocks Decline as Political Uncertainty Fuels Volatility

Charles Schwab: On the Market

Posted: 12/1/2017 4:15 PM EST

Stocks Decline as Political Uncertainty Fuels Volatility

 

U.S. stocks finished the trading session lower, but well off the day's the worst levels as volatility ramped up on heightened uncertainty inside the beltway. Afternoon reports suggesting that the Senate has enough votes to pass its tax bill were overshadowed by some uncertainty regarding the possible ramifications that the developing situation surrounding former NSA advisor Mike Flynn may have for the Trump administration. Treasury yields and the U.S. dollar traded lower as some upbeat reads on the manufacturing sector were seemingly brushed aside. Energy shares outperformed amid a rise in crude oil prices and gold gained ground.

The Dow Jones Industrial Average (DJIA) declined 41 points (0.2%) to 24,232, the S&P 500 Index decreased 5 points (0.2%) to 2,642, and the Nasdaq Composite lost 26 points (0.4%) to 6,848. In heavy volume, 972 million shares were traded on the NYSE and 2.3 billion shares changed hands on the Nasdaq. WTI crude oil gained $0.96 to $58.36 per barrel and wholesale gasoline ticked $0.01 higher to $1.74 per gallon. Elsewhere, the Bloomberg gold spot price increased $5.61 to $1,280.61 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was nearly 0.2% lower at 92.88. Markets were mixed for the week, as the DJIA rallied 2.9% and the S&P 500 Index advanced 1.5%, while the Nasdaq Composite declined 0.6%.

Ulta Beauty Inc. (ULTA $213) reported Q3 earnings-per-share (EPS) of $1.70, or $1.71 ex-items, versus the $1.66 FactSet estimate, as revenues rose 18.6% year-over-year (y/y) to $1.3 billion, roughly in line with forecasts. Q3 same-store sales rose 10.3% y/y, matching expectations. UTLA's gross margin came in south of expectations. The company issued Q4 EPS guidance that was below estimates, while its same-store sales outlook for the period had a midpoint that was just shy of forecasts. Shares closed solidly lower.

VMware Inc. (VMW $124) posted Q3 earnings of $1.07 per share, or $1.34 ex-items, compared to the projected $1.28, with revenues growing 11.0% y/y to $2.0 billion, roughly in line with forecasts. The cloud infrastructure and business mobility company issued Q4 guidance that exceeded expectations. Shares were nicely higher.

The major automakers reported November sales today, with General Motors Co's (GM $43) sales declining 2.9% y/y, compared to FactSet's projected 1.5% decrease. Ford Motor Co (F $13) reported a 6.7% rise in sales, versus the expected gain of 3.3%. Fiat Chrysler Automobiles NV's (FCAU $17) Chrysler sales fell 3.7%, compared to the expected 5.6% drop. GM and FCAU traded lower, while F finished higher.

Manufacturing activity continues to show solid expansion, tax reform uncertainty flares up

The Institute for Supply Management (ISM) Manufacturing Index (chart) for November declined to 58.2 from 58.7 in October, compared to the Bloomberg forecast calling for a dip to 58.3. New orders rose 0.6 points to 64.0 and production gained 2.9 points to 63.9, while employment dipped 0.1 points to 59.7 and prices declined 3.0 points to 65.5. Order backlog remained at 55.0 and new export orders decreased 0.5 points to 56.0. ISM said comments from respondents reflect expanding business conditions.

The final Markit U.S. Manufacturing PMI Index was revised to 53.9 for November from the preliminary reading of 53.8, versus expectations of 54.0, and below the 54.6 level posted in October. The release is independent and differs from ISM's manufacturing report, as it has less historic value and Markit weights its index components differently.

Although manufacturing slowed, these reports continue to suggest solid growth with readings above 50 denoting expansion for both indexes. Moreover, Schwab's Chief Investment Strategist Liz Ann Sonders notes that it’s time for optimism about a significant capex cycle unfolding as we look ahead to 2018, in her article, Takin Care of Business: Several Important Kickers for a Strong Capex Cycle, adding that tax reform—if we get it—would be an additional kicker.

Construction spending (chart) rose 1.4% month-over-month (m/m) in October, well above projections of a 0.5% increase, and following September's unrevised 0.3% increase. Residential spending was up 0.4% m/m, while non-residential spending jumped 2.1%.

Treasuries finished higher, with the yield on the 2-year note dipping 1 basis points (bp) to 1.77%, the yield on the 10-year note falling 5 bps to 2.36% and the 30-year bond rate dropping 7 bps to 2.76%.

The U.S. dollar reversed to the downside, along with Treasury yields following a two-day rally, after former National Security Advisor Flynn pleaded guilty for lying to the FBI and agreed to cooperate with the Special Counsel's Office. This caused a spike in volatility and fostered uncertainty about what this could mean for the Trump Presidency, with the Senate scrambling to find enough support to bring its tax bill to a final vote. The Senate delayed yesterday's final vote as a key area of compromise regarding deficit concerns hit a snag. The Senate spent much of the day in preliminary procedures to try to mend disagreements. Afternoon reports have suggested that the legislative body now has enough votes to pass its bill with a vote expected later in the day.

Schwab's Vice President of Legislative and Regulatory Affairs, Michael T. Townsend notes in his latest commentary, Tax Reform Bills Progress, but Many Hurdles Remain, if the bill passes the Senate, the House and Senate would need to convene a conference to negotiate and reconcile differences between the two bills to produce a single consensus bill. That bill would then need to be approved by both chambers before it could be sent to President Donald Trump for his signature.

Negotiations between the two chambers will likely be extremely challenging, given the differences between the two approaches. For investors, we still think it is too early to take any drastic action. If and when a tax bill passes, there will be time to review the details and amend your tax and financial plans accordingly. Regardless of the outcome of the tax bill, it’s always a good idea to meet with your tax and financial advisors before the end of the year to review your current financial situation and discuss your plans for the coming year.

Europe falls late in the day, Asia mixed

The European equity markets fell late in the session, with yesterday's delayed vote on tax reform in the U.S. stymieing recent optimism regarding progress being made to pass a bill and causing uncertainty to flare up. This was exacerbated former U.S. National Security Advisor Flynn pleading guilty for lying to the FBI and agreeing to cooperate with the Special Counsel's Office. Technology issues in the region extended the week's selloff, while auto-related issues saw some pressure. However, the energy sector was the lone group in positive territory amid a rally in crude oil prices on the heels of yesterday's OPEC agreement to extend its production cuts to the end of next year. An upbeat read on November eurozone manufacturing growth by Markit, which showed growth was revised to a higher acceleration from October's than initially estimated, was overshadowed.

The euro overcame early pressure as the U.S. dollar fell noticeably on the exacerbated U.S. political uncertainty, and the British pound came off the worst levels of the day but still modestly pared a recent rally. The pound found some strength this week amid signs that the deadlocked Brexit negotiations may be heading to the next stage. Bond yields in the region mostly saw solid pressure. Amid the flare-up in volatility, Schwab's Chief Global Investment Strategist Jeffrey Kleintop, CFA, notes in his article, Are Stocks too Expensive?, that although world stock market valuations are above average, similar valuations have produced double-digit gains over the following 12 months during the past 50 years. Jeff concludes that valuations support a globally diversified portfolio offering the best diversification benefits in 20 years.

Stocks in Asia finished mixed with the markets choppy following yesterday's delayed tax reform vote in the U.S. that appeared to cool some of the optimism that has led a sharp rally in the U.S. equity markets this week. Shares of Japanese companies advanced with the yen reversing a brief spike yesterday, while reports showed the nation's Q3 capital spending accelerated more than expected and household spending for October came in stronger than anticipated, while national October consumer price inflation rose in line with expectations. Mainland Chinese stocks finished flat and equities trading in Hong Kong declined on the heels of the flared-up U.S. tax reform uncertainty and a report from Caixin showing growth in the country's manufacturing output unexpectedly slowed, diverging from yesterday's government report that suggesting expansion surprisingly accelerated.

Australian securities gained ground with financials modestly paring yesterday's drop on the government's announcement that it will launch an inquiry into the sector, while energy issues rose following yesterday's OPEC production extension. Indian stocks fell on the heels of late-yesterday's report that showed Q3 GDP accelerated to a 6.3% y/y pace of growth, but slightly below the projected 6.4% expansion. South Korean equities finished flat in the wake of the recent selloff in the tech sector, yesterday's Bank of Korea rate hike, and today's stronger-than-expected Q3 GDP report. Even after this week's choppiness for the markets, they hold onto strong gains for the year fostered by the broadest economic growth in a decade, which is expected to continue in 2018 as discussed by Schwab's Jeffrey Kleintop, CFA, discusses in his article, 5 Reasons Investors Should Give Thanks.

Stocks higher on week as damage already done by the bulls

Despite the spike in volatility on Friday, most U.S. equity markets posted solid gains for the week, bolstered by signs the Senate's tax reform bill was finding enough support to gain momentum toward a final vote. Telecom and financial stocks led the way on the tax reform optimism, though a noticeable sector rotation came to the detriment of technology issues and the Nasdaq, which have led the markets' yearly rally and string of record highs. Economic optimism also helped boost the markets, with Consumer Confidence hitting a 17-year high, new home sales unexpectedly jumping to a decade high, Q3 GDP being revised higher to 3.3%, and culminating with the Fed's Beige Book showing business activity remained steady and noting a slight improvement in the outlook. Energy issues finished higher, while the highly-anticipated OPEC meeting delivered a production cut extension. Following Friday's volatility surge, the U.S. dollar finished little changed after showing mid-week signs of life and the Treasury yield curve gave back a brief bout of steepening.

This sets the stage for next week, in which the economic calendar will likely contend with continued scrutiny of tax reform, while delivering factory orders, the trade balance, the ISM non-Manufacturing Index, Q3 nonfarm productivity and unit labor costs, as well as the preliminary December University of Michigan Consumer Sentiment Index. However, the headlining report will likely be Friday's November nonfarm payroll report, with the Fed's December monetary policy meeting looming the following week and highly-expected to deliver a third rate hike of the year.

As noted in the latest Schwab Market Perspective: Incredible, Amazing…Unstop-a-bull?, the bull market continues to be undisturbed by a myriad of actual or potential negative events and momentum favors the bulls for the foreseeable future. However, elevated valuations and growing investor complacency pose risks that could lead to a long-awaited pullback and/or a pickup in volatility from today’s extremely low base.

International reports due out next week that deserve a mention include: Australia—Q3 GDP and the Reserve Bank of Australia's monetary policy decision. China—trade balance, Caixin's PMI Services Index and inflation statistics. India—the Reserve Bank of India's monetary policy decision. Japan—Q3 GDP. Eurozone—Markit's business activity reports, retail sales and Q3 GDP, along with German factory orders and trade balance. U.K.—industrial and manufacturing production, trade balance and the Bank of England's inflation target.