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Wall Street closed modestly lower on Friday. Nonfarm employment numbers showed that jobs had risen much higher than expected in November, raising concerns that this might stop the Fed from going slow on its policy tightening measures. Treasury yields remained virtually flat. All three major indexes ended slightly in the red.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 0.1% or 34.87 points to end at 34,429.88 points. Seventeen components of the 30-stock index ended in the positive territory, while 12 ended in the negative.
The S&P 500 lost 0.1% or 4.87 points to close at 4,071.70 points. Six of the 11 broad sectors of the benchmark index ended in negative territory. The Energy Select Sector SPDR (XLE), the Technology Select Sector SPDR (XLK) and the Real Estate Select Sector SPDR (XLRE) decreased 0.6%, 0.6% and 0.5%, respectively, while the Materials Select Sector SPDR (XLB) gained 1.1%.
The tech-heavy Nasdaq dropped 0.2% or 20.95 points to finish at 11,461.50 points.
The fear-gauge CBOE Volatility Index (VIX) decreased 3.9% to 19.06. Advancers outnumbered decliners on the NYSE by a 1.15-to-1 ratio. On Nasdaq, a 1.35-to-1 ratio favored the advancers. The S&P 500 posted 20 new 52-week highs.
Nonfarm Payrolls Weigh In On The Market
Times are such that what may be good for the jobs market may not necessarily be encouraging news for Wall Street. In recent weeks, the market has been singularly driven in the hope that the Fed would be looking to slow down its steep pace of interest rate hikes, having seen its policies take effect in reducing demand, thereby lending some breathing space to stock trading.
With the holiday season commencing with Thanksgiving, market participants have hoped that the central bank would at least reduce to a 50 bps hike in its December meet, as opposed to the string of 75 bps hikes it has unleashed in its bid to tackle inflation. Confidence has risen in that respect as various Fed officials, including Fed Chair Jerome Powell have hinted that indeed they are looking to do so.
However, a much higher-than-expected nonfarm employment report for November, released on Friday, dented that confidence somewhat. The Bureau of Labor Statistics reported that total nonfarm payroll employment increased by 263,000 in November, roughly in line with the average growth over the past three months. This has decimated the consensus estimate of 200,000 job additions for the period. For October, the numbers were revised upward to 284,000 from the 261,000 reported earlier. There were notable job gains in the leisure and hospitality, health care, and government sectors.
Investors are apprehensive that upon seeing these numbers, the Fed might infer that it has not done enough to dampen market demand. Otherwise, the labor market should not be booming. And this might push the central bank to pivot on its recent soft stance and turn hawkish again.
Indeed, the possibility of yet another 75 bps hike in December has become a talking point after the numbers were released. The market gave up some of its gains made earlier when Jerome Powell’s positive remarks had emerged, and the S&P 500 closed slightly lower for the week.
The yield on the U.S. two-year Treasury note, which is sensitive to interest rate expectations, rose 0.02 percentage points to 4.27% as stock prices fell. The 10-year treasury note closed virtually flat.
The Labor Department said on Friday that the unemployment rate remained unchanged for November at 3.7%, in line with expectations.
Average Hourly Earnings increased by 0.6% for November, while the increase for October was revised up to 0.5% from the previously reported 4%.
Average Workweek decreased to 34.5 against the 34.4 reported in October.
Weekly Roundup
The three most widely followed indexes closed a second straight winning week for the first time since October. The Dow Jones Industrial Average, the S&P 500 and the tech-heavy Nasdaq gained 0.2%, 1.1% and 2.1%, respectively. Stocks did well earlier in the week on Fed Chair Jerome Powell’s comment in which he strongly signaled that the central bank would be slowing down its rate hikes. As the week drew to a close, a hotter-than-expected labor report wiped away some of the gains, sparking a debate on whether the numbers would push the Fed into raising rates yet again by 75 bps in its December meeting.
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Stock Market News for Dec 5, 2022
Wall Street closed modestly lower on Friday. Nonfarm employment numbers showed that jobs had risen much higher than expected in November, raising concerns that this might stop the Fed from going slow on its policy tightening measures. Treasury yields remained virtually flat. All three major indexes ended slightly in the red.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 0.1% or 34.87 points to end at 34,429.88 points. Seventeen components of the 30-stock index ended in the positive territory, while 12 ended in the negative.
The S&P 500 lost 0.1% or 4.87 points to close at 4,071.70 points. Six of the 11 broad sectors of the benchmark index ended in negative territory. The Energy Select Sector SPDR (XLE), the Technology Select Sector SPDR (XLK) and the Real Estate Select Sector SPDR (XLRE) decreased 0.6%, 0.6% and 0.5%, respectively, while the Materials Select Sector SPDR (XLB) gained 1.1%.
The tech-heavy Nasdaq dropped 0.2% or 20.95 points to finish at 11,461.50 points.
The fear-gauge CBOE Volatility Index (VIX) decreased 3.9% to 19.06. Advancers outnumbered decliners on the NYSE by a 1.15-to-1 ratio. On Nasdaq, a 1.35-to-1 ratio favored the advancers. The S&P 500 posted 20 new 52-week highs.
Nonfarm Payrolls Weigh In On The Market
Times are such that what may be good for the jobs market may not necessarily be encouraging news for Wall Street. In recent weeks, the market has been singularly driven in the hope that the Fed would be looking to slow down its steep pace of interest rate hikes, having seen its policies take effect in reducing demand, thereby lending some breathing space to stock trading.
With the holiday season commencing with Thanksgiving, market participants have hoped that the central bank would at least reduce to a 50 bps hike in its December meet, as opposed to the string of 75 bps hikes it has unleashed in its bid to tackle inflation. Confidence has risen in that respect as various Fed officials, including Fed Chair Jerome Powell have hinted that indeed they are looking to do so.
However, a much higher-than-expected nonfarm employment report for November, released on Friday, dented that confidence somewhat. The Bureau of Labor Statistics reported that total nonfarm payroll employment increased by 263,000 in November, roughly in line with the average growth over the past three months. This has decimated the consensus estimate of 200,000 job additions for the period. For October, the numbers were revised upward to 284,000 from the 261,000 reported earlier. There were notable job gains in the leisure and hospitality, health care, and government sectors.
Investors are apprehensive that upon seeing these numbers, the Fed might infer that it has not done enough to dampen market demand. Otherwise, the labor market should not be booming. And this might push the central bank to pivot on its recent soft stance and turn hawkish again.
Indeed, the possibility of yet another 75 bps hike in December has become a talking point after the numbers were released. The market gave up some of its gains made earlier when Jerome Powell’s positive remarks had emerged, and the S&P 500 closed slightly lower for the week.
The yield on the U.S. two-year Treasury note, which is sensitive to interest rate expectations, rose 0.02 percentage points to 4.27% as stock prices fell. The 10-year treasury note closed virtually flat.
Consequently, shares of PayPal Holdings, Inc. (PYPL - Free Report) and Salesforce, Inc. (CRM - Free Report) slid 4.9% and 1.7%, respectively. Both carry a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Economic Data
The Labor Department said on Friday that the unemployment rate remained unchanged for November at 3.7%, in line with expectations.
Average Hourly Earnings increased by 0.6% for November, while the increase for October was revised up to 0.5% from the previously reported 4%.
Average Workweek decreased to 34.5 against the 34.4 reported in October.
Weekly Roundup
The three most widely followed indexes closed a second straight winning week for the first time since October. The Dow Jones Industrial Average, the S&P 500 and the tech-heavy Nasdaq gained 0.2%, 1.1% and 2.1%, respectively. Stocks did well earlier in the week on Fed Chair Jerome Powell’s comment in which he strongly signaled that the central bank would be slowing down its rate hikes. As the week drew to a close, a hotter-than-expected labor report wiped away some of the gains, sparking a debate on whether the numbers would push the Fed into raising rates yet again by 75 bps in its December meeting.