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U.S. stock markets closed sharply lower on Wednesday following the release of the Fed’s December FOMC meeting minutes. Market participants remained concerned when first cut in interest rate will take place. Moreover, investors digested recently released mixed economic data. All three major stock indexes ended in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) slid 0.7% or 284.85 points to close at 37,430.19. This marked the first negative closing of the blue-chip index in 2024. Notably, 25 components of the 30-stock index ended in negative territory, while 5 ended in positive zone.
The tech-heavy Nasdaq Composite finished at 14,592.21, declining 2.1 or 173.73 points% due to weak performance of large-cap technology stocks. The S&P 500 fell 0.8% to finish at 4,704.81. Nine out of 11 broad sectors of the benchmark ended in negative territory while two in positive zone.
The Consumer Discretionary Select Sector SPDR (XLY), the Real Estate Select Sector SPDR (XLRE), the Industrial Select Sector SPDR (XLI), the Technology Select SPDR (XLK) and the Materials Select Sector SPDR (XLB) tumbled 2%, 2.4%, 1.5%, 1% and 1.1%, respectively, while the Energy Select Sector SPDR (XLE) rose 1.6%.
The fear-gauge CBOE Volatility Index (VIX) was up 6.4% to 14.04. A total of 11.84 billion shares were traded on Wednesday, lower than the last 20-session average of 12.35 billion.
Fed’s December FOMC Indicates Rate Cut
The minutes of the Fed’s December FOMC meeting indicated that interest rate cut will happen in 2024, although it refrained to provide any time line. Majority of FOMC members decide to hold benchmark lending rate steady in a range between 5.25% and 5.5%. Members indicated they expect three quarter-percentage point cuts by the end of 2024.
Per the minute, “In discussing the policy outlook, participants viewed the policy rate as likely at or near its peak for this tightening cycle, though they noted that the actual policy path will depend on how the economy evolves.”
Investors remained shaky without finding any clear time line for the rate cut to be effective. According to CME FedWatch, at present, there exist 72.6% probability that the first rate cut will take place on March. Following the release of the minutes, the yield on the benchmark 10-Year U.S. Treasury Note briefly touched 4% before settling at 3.91%.
The Institute of Supply Management reported that the manufacturing Index for December came in at 47.4, marginally ahead of the consensus estimate of 47.2. The reading for November was 46.7. Any reading below 50 indicates contraction in manufacturing activities.
December marked the 14th consecutive months of manufacturing contraction after 28th months of expansion. The new orders Index remained in contraction territory at 47.1, lower than November’s reading of 48.3.
The Department of Labor revealed in its monthly Job Openings and Labor Turnover Survey, or JOLTS report, that job openings were down 62,000 to 8.79 million in November, marking the lowest level in 32 months. Data for October was revised marginally to 8.852 million instead of the previously reported 8.733 million. However, there were 1.4 job openings for every unemployed person in November compared to 1.36 in October.
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Stock Market News for Jan 4, 2024
U.S. stock markets closed sharply lower on Wednesday following the release of the Fed’s December FOMC meeting minutes. Market participants remained concerned when first cut in interest rate will take place. Moreover, investors digested recently released mixed economic data. All three major stock indexes ended in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) slid 0.7% or 284.85 points to close at 37,430.19. This marked the first negative closing of the blue-chip index in 2024. Notably, 25 components of the 30-stock index ended in negative territory, while 5 ended in positive zone.
The tech-heavy Nasdaq Composite finished at 14,592.21, declining 2.1 or 173.73 points% due to weak performance of large-cap technology stocks. The S&P 500 fell 0.8% to finish at 4,704.81. Nine out of 11 broad sectors of the benchmark ended in negative territory while two in positive zone.
The Consumer Discretionary Select Sector SPDR (XLY), the Real Estate Select Sector SPDR (XLRE), the Industrial Select Sector SPDR (XLI), the Technology Select SPDR (XLK) and the Materials Select Sector SPDR (XLB) tumbled 2%, 2.4%, 1.5%, 1% and 1.1%, respectively, while the Energy Select Sector SPDR (XLE) rose 1.6%.
The fear-gauge CBOE Volatility Index (VIX) was up 6.4% to 14.04. A total of 11.84 billion shares were traded on Wednesday, lower than the last 20-session average of 12.35 billion.
Fed’s December FOMC Indicates Rate Cut
The minutes of the Fed’s December FOMC meeting indicated that interest rate cut will happen in 2024, although it refrained to provide any time line. Majority of FOMC members decide to hold benchmark lending rate steady in a range between 5.25% and 5.5%. Members indicated they expect three quarter-percentage point cuts by the end of 2024.
Per the minute, “In discussing the policy outlook, participants viewed the policy rate as likely at or near its peak for this tightening cycle, though they noted that the actual policy path will depend on how the economy evolves.”
Investors remained shaky without finding any clear time line for the rate cut to be effective. According to CME FedWatch, at present, there exist 72.6% probability that the first rate cut will take place on March. Following the release of the minutes, the yield on the benchmark 10-Year U.S. Treasury Note briefly touched 4% before settling at 3.91%.
Consequently, shares of technology giants like Apple Inc. (AAPL - Free Report) , NVIDIA Corp. (NVDA - Free Report) and Meta Platforms Inc. (META - Free Report) fell 0.8%, 1.2% and 0.5%, respectively. NVIDIA and Meta Platforms currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Economic Data
The Institute of Supply Management reported that the manufacturing Index for December came in at 47.4, marginally ahead of the consensus estimate of 47.2. The reading for November was 46.7. Any reading below 50 indicates contraction in manufacturing activities.
December marked the 14th consecutive months of manufacturing contraction after 28th months of expansion. The new orders Index remained in contraction territory at 47.1, lower than November’s reading of 48.3.
The Department of Labor revealed in its monthly Job Openings and Labor Turnover Survey, or JOLTS report, that job openings were down 62,000 to 8.79 million in November, marking the lowest level in 32 months. Data for October was revised marginally to 8.852 million instead of the previously reported 8.733 million. However, there were 1.4 job openings for every unemployed person in November compared to 1.36 in October.