S&P 500 Forecast: Index closes down half a percentage point on Monday, Gitlab earnings ahead

• Standard & Poor’s 500 index has gained for five consecutive weeks.
• US Treasury yields rise more than 1% along much of the curve.
• Friday’s Nonfarm Payrolls report is the primary data release this week.
• Uber Technologies is set to join the index on December 18.
• Earnings arrive from Autozone, Nio, GameStop, Broadcom, Lululemon and Dollar General.

The S&P 500 index opened closed down 0.54% on Monday, while the NASDAQ Composite lost 0.84% and the Dow Jones receded 0.11%. The S&P 500 index gained in each of the past five weeks. The market awaits earnings after the close from Gitlab (GTLB).

The index sits just shy of the yearly high at 4,607, and while gains have become lighter in the last two weeks, it still seems possible that the S&P 500 will mark a new annual high before the year is out.

US Treasury yields rose on Monday, a fact that has led equities to slide at the start of the week. The 12-month through 10-year all saw yields jump more than 1% on Monday.

Uber Technologies (UBER) has received notice that it will join the S&P 500 on December 18, and shares of the rideshare company have spiked. Apple (AAPL) is placing a put on the index as it momentarily shutters production in India of its iPhone due to torrential rains.

Most of the market is focused on US jobs figures this week as the November Nonfarm Payrolls data gets released this Friday. Additionally, earnings from Broadcom, Lululemon and Autozone will catch eager ears throughout the week. This is in addition to GameStop (GME) , Nio (NIO) and Dollar General (DG).

S&P 500 News: Uber to join index

UBER stock gained more than 5% at the beginning of Monday, rising above $60 for the first time since April 2021. The rideshare or mobility company has managed to leave behind years of losses as CEO Dara Khosrowshahi has placed it on a trajectory of rising profitability. That newfound profitability has allowed it to finally be accepted into the S&P 500.

Uber stock will gain in price ahead of the index inclusion since index managers are forced to buy shares in the leadup to its official debut on December 18 – just two weeks from now. 

Analysts have also had a lot of positive commentary for the stock. Oppenheimer raised its price target to $75 on UBER stock as S&P 500 inclusion marks a new era for the company. Argus raised its price target to $69. Both analysts expect UBER to enter the buyback game with its newfound focus on profitability.

"Following the inclusion, we expect UBER to lean into growth and share buybacks, which should increase investor sentiment for growth/ return in 2024," wrote Oppenheimer analyst Jason Helfstein.

Argus estimated that Uber will earn $1.54 per share in 2024 on $47.1 billion in revenue.

Earnings collide with Nonfarm Payrolls for a busy first week of December

Before November’s much-watched jobs report comes on Friday, several big-name firms will report earnings on the back end of a winding down earnings season.

Broadcom (AVGO) is arguably the most important of these companies. The stock is up more than 67% year to date and has recently received its final go-ahead from important global regulators in order to finalize its acquisition of VMWare. 

After the market closes on Thursday, Broadcom is expected to deliver adjusted EPS of $10.96 on revenue of $9.28 billion.

Lululemon (LULU) will compete with Broadcom for eyeballs late Thursday. It is slated to report consensus adjusted EPS of $2.28 on $2.19 billion in sales. The activewear brand nearly always beats the consensus, but the stock has received two earnings revisions in the past few months for the reporting quarter.

Autozone (AZO) on Monday is expected to earn $31.57 in adjusted EPS on $4.19 billion in sales. Both of these figures demonstrate healthy growth over the same quarter a year ago, but analysts are mixed based on earnings revisions for the quarter.

Then on Friday, investors will turn their gaze toward the November Nonfarm Payrolls report. A number under 200K will delight the market as labor market weakness is thought necessary to appease the Federal Reserve. Investors have started to take bets on a central bank rate cut at either the March or May meetings. At the moment, the May meeting is the favorite by a long shot.

Consensus calls for 180K net new hires on Friday, which comes after October’s 150K number. A figure too far below 150K might worry the market that a hard landing has finally begun. The Unemployment Rate is expected to stand still at 3.9%.