Closing Stock Market Summary
Stocks and bonds had a somewhat choppy session. The S&P 500 closed just below 4,700 with a 0.2% gain. The Nasdaq Composite and Dow Jones Industrial Average each logged a 0.1% gain while the Russell 2000 declined 0.3%.
Market participants were digesting the December Employment Situation Report and the December ISM Services PMI. The former featured better than expected nonfarm payrolls, average hourly earnings, and a steady unemployment rate versus expectations for an increase. The latter showed a larger than expected deceleration in December service sector growth. Together, those reports stirred uncertainty about rate-cut expectations.
The solid employment numbers may keep the Fed from cutting rates as much as the market had expected, whereas the soft reading for business activity in the nation's largest sector would perhaps keep the Fed aligned with the market's rate-cut expectations.
The 10-yr yield shot to 4.09% after the jobs report, but moved as low as 3.95% following the PMI number. It settled the day at 4.04%, which is five basis points higher than yesterday. The 2-yr note yield, which is most sensitive to changes in the fed funds rate, settled the session at 4.39% after dipping to 4.32% earlier.
A late afternoon rollover in (AAPL 181.18, -0.73, -0.4%) shares weighed down the major indices following news that the DOJ is getting close to filing an antitrust case against Apple, according to The New York Times. The Vanguard Mega Cap Growth ETF (MGK) still eked out a 0.1% gain.
Only three S&P 500 sectors closed with declines -- consumer staples (-0.2%), real estate (-0.2%), and health care (-0.02%) -- while the financials sector (+0.5%) saw the biggest gain.
None of the sectors moved more than 0.5% in either direction.
- Dow Jones Industrial Average: -0.6%
- S&P 500: -1.5%
- S&P Midcap 400: -2.5%
- Nasdaq Composite: -3.3%
- Russell 2000: -3.8%
Reviewing today's economic data:
- December Nonfarm Payrolls 216K (consensus 162K); Prior was revised to 173K from 199K; December Nonfarm Private Payrolls 164K (Briefing.com consensus 132K); Prior was revised to 136K from 150K;
- December Unemployment Rate 3.7% (consensus 3.8%); Prior 3.7%; December Avg. Hourly Earnings 0.4% (consensus 0.3%); Prior 0.4%; December Average Workweek 34.3 (consensus 34.4); Prior 34.4
- The key takeaway from the report is that it wasn't weak, so the market is going to have to grapple with the notion that the Fed may not cut rates as many times in 2024 as the market had come to expect at the end of 2023.
- November Factory Orders 2.6% (consensus 1.3%); Prior was revised to -3.4% from -3.6%
- The key takeaway from the report is that factory order strength was muted in November excluding transportation.
- December ISM Non-Manufacturing PMI 50.6% (consensus 52.5%); Prior 52.7%
- The key takeaway from the report is that the largest sector of the U.S. economy saw a slowdown in activity in December to a level that was just above contraction -- a directional move that should at least keep the Fed from raising rates again if it doesn't elect to cut rates as soon as the market expects.
Monday's economic calendar is limited to the November Consumer Credit report at 15:00 ET.