The Week Ahead: TD and CRM Earnings; Employment Report and PMIs

On Tuesday, Salesforce is set to release its earnings report, amid analysts' optimistic views on the company's advancements in AI within its customer relationship management (CRM) services. Recently, Salesforce expanded into data security by acquiring the startup company Own, further broadening its business scope.

In the tech sector, Marvell Technology is scheduled to present its earnings report on Tuesday as well. The company, known for its networking chips utilized in data centers, aims to demonstrate sustained growth driven by increasing AI demand. This week will also see earnings reports from other technology firms including Synopsys, which has leveraged AI demand to enhance its microchip design software, and cloud security firm Zscaler, which reports on Monday.

Additionally, Royal Bank of Canada (RBC) is preparing to announce its quarterly results, focusing on continued growth in its personal banking and wealth management sectors. Other notable Canadian financial institutions such as Bank of Montreal and Scotiabank are also expected to release their financial reports this week.

Stocks are currently at or near record levels, and investors see no clear obstacles preventing further rises in the short term. Despite high market valuations and buoyant sentiment, optimistic investors cite a solid macroeconomic environment and positive earnings growth projections as reasons supporting current stock prices. Historically, December also tends to be a strong month for the stock market. According to Sam Stovall, chief investment strategist at CFRA Research, December not only typically sees the highest gains for the S&P 500 but also experiences the least volatility of any month. Stovall highlighted that since 1945, the S&P 500 has averaged a 1.6% gain in December, with prices increasing more than 75% of the time.

Stovall humorously remarked, "Like something out of Santa Claus, you could say, 'on Dasher, on December,' as he described the month's consistent performance gains. With the S&P 500 already registering a 26% increase this year, a typical rise in December could rank 2024 among the most successful years historically. According to FactSet, there have only been six years in the past fifty where the S&P 500 achieved gains exceeding 27%. But investors will have to navigate a slew of economic data this coming month, as well as uncertainty around the incoming administration's policies.

The upcoming US November jobs report, scheduled for release on Friday, represents the final significant glimpse into the labor market before the Federal Reserve's meeting on December 17-18. This report is crucial for investors who are planning their strategies regarding interest rates for the coming month and beyond. Investors are optimistic about receiving a positive report—one that demonstrates steady growth in the labor market, though with indications of slight cooling. Such outcomes could influence the Federal Reserve to maintain its current trajectory towards easing monetary policy.

For Canada labor market, after a disappointing October, economists predict that the November labor survey will report an addition of 32,000 jobs. However, this increase in hiring would be an anomaly in a generally weakening labor market. Only a few industries are consistently seeking workers, particularly for full-time roles. Additionally, even when employment numbers rise, companies are reducing work hours to balance payrolls amidst declining business confidence.