U.S. stocks finished sharply higher on Friday, but not by enough to prevent weekly losses for the S&P 500 or Dow as investors heard more from the Federal Reserve on the need to tamp down inflation. The Dow Jones Industrial Average
DJIA,
rose about 329 points, or 1%, to end near 33,374 on Friday, while the S&P 500 index
SPX,
gained 1.9% and the Nasdaq Composite Index
COMP,
closed up 2.7%. That was their best daily percentage gain since Jan. 6, according to Dow Jones Market Data. The Dow still shed 2.7% for the week, the S&P 500 lost 0.7% and the Nasdaq gained 0.6%. Fed Governor Christopher Waller said it’s the time to slow, but not stop rate increased on Friday, while New York Fed President John Williams said inflation remains “far too high.”. Shares of Netflix Inc.
NFLX,
rose about 7.8% Friday after it reported gaining millions of new subscribers. Rate-sensitive stocks have gotten a slight reprieve this year from falling long-term interest rates. The 10-year Treasury rate fell for a third week in a row to 3.483% on Friday at 3 p.m. Eastern, down from a peak in October of 4.231%. There’s a big lineup of earnings reports in store for next week, including from Microsoft Corp
MSFT,
3M Co.
MMM,
Tesla Inc.
TSLA,
Boeing Co.
BA,
and McDonald’s Corp.
MCD,
Tag: COMP
-
Dow, S&P 500 on Friday post biggest gain in 2 weeks, but also weekly losses
+1.00% +1.89% +2.66% +8.46% +3.57% ,+1.87% ,+4.91% ,-0.16% +1.90% . -
Bed Bath & Beyond gets Nasdaq delisting warning, stock tumbles 7%
Bed Bath & Beyond Inc. has received a warning that it is not in compliance for continued Nasdaq listing because the company has not yet filed its Form 10-Q quarterly report with the Securities and Exchange Commission.
In an SEC filing Thursday, the troubled home-goods retailer said it had received the Nasdaq notice on Jan. 12. The notice has no immediate effect on the listing or trading of Bed Bath & Beyond’s
BBBY,
-4.09%
common stock on the Nasdaq
COMP,
+0.86% ,
the filing said. “The Notice states that the Company has 60 calendar days from the date of the Notice, or March 13, 2023, to submit a plan to regain compliance with the Listing Rule,” Bed Bath & Beyond said in the filing. -
Netflix Surprises With a Subscriber Beat and Hastings Steps Back
Netflix
posted better-than-expected subscriber growth in the fourth quarter, adding 7.66 million net new subscribers, well ahead of the 4.5 million the company had projected.The company also announced that founder and co-CEO Reed Hastings was moving to the executive chairman role to “complete our succession process.” Netflix said that Chief operating officer Greg Peters will join Ted Sarandos as co-CEO of the company.
-
Dow, S&P 500 end lower Thursday for third straight day as Treasury responds to debt ceiling impasse
Major U.S. stock indexes closed lower Thursday, with the S&P 500 and Dow each posting a third day in a row of declines, as investors focused on signs of a weakening economy and the risks of Congress failing to address the U.S. debt limit. The Dow Jones Industrial Average
DJIA,
-0.76%
fell about 252 points, or 0.8%, ending near 33,044, while the S&P 500 index
SPX,
-0.76%
shed 0.8%. The Nasdaq Composite Index
COMP,
-0.96%
fell 1%, its second day in a row of losses. Investors weighed a further decline in the construction of new homes in December and jobs data that suggested many employers remain reluctant to lay off staff outside of the technology sector. The Federal Reserve is widely expected to keep raising rates when its next policy meeting concludes in early February, albeit at a slower pace. Treasury Secretary Janet Yellen on Thursday also said “extraordinary measures” were unfurled on Thursday to keep the U.S. government paying its bills after hitting its ceiling for borrowering. -
Why the U.S. debt-ceiling is worrying stock and bond investors
The U.S. Treasury Department began taking “extraordinary measures” on Thursday to keep the federal government current on its bills, while giving Congress more time to come up with a debt ceiling deal.
Those special measures allow the Treasury to keep paying its bills, including paying holders of government debt what they are due, while also, for now, continuing the issuance of bills and notes as scheduled in the near $24 trillion Treasury market, the world’s biggest debt market, to replace maturing debt.
“There’s constant maturities and constant new issuance,” said Jim Vogel, an interest-rate strategist at FHN Financial, in an interview Thursday. “Until the Treasury calls a halt to auctions they go on as normal.”
In part, new note auctions on deck will replace maturing bonds issued years ago, which should help give confidence to investors that the U.S. government intends to fully repay principal and interest, as promised. It also helps bide time for Congress to strike a deal to increase or suspend the existing debt limit.
“Your early warning system is when 6-month bills get cheaper,” Vogel said, adding that a wobble in that part of the Treasury market could signal worries by investors that top lawmakers could fail to reach a debt ceiling deal by this summer, which could then raise the threat level of a U.S. government default.
What’s next in the U.S. debt limit standoff
The U.S. debt limit was first set in 1917, and already has been increased or suspended 102 times since World War II, according to David Kelly, chief global strategist at JP Morgan Funds, in a recent client note.
The government had been approaching its current debt limit of $31.385 trillion, prompting Treasury Secretary Janet Yellen on Thursday to deploy special measures to keep the government current on its bills, including making payments to bondholders, in moves she outlined a week ago.
Kelly said the Treasury has leeway to make adjustments to postpone “our real rendezvous with disaster” potentially until June, but that from an economic and financial perspective a U.S. default would be “an unmitigated disaster.”
Tax payments due to the U.S. government from corporations and households this spring also factor into the bigger debt-limit picture, while also influencing the final deadline for Congress to avoid an default on America’s debt.
“We are coming up to the March corporate tax day,” said Steven Ricchiuto, U.S. chief economist at Mizuho Securities, by phone Thursday. “That could boost the Treasury’s balances,” he said, while also noting the influx from taxes last was higher than anticipated.
Why investors are focusing on the debt ceiling now
With the ultimate showdown likely months away there are no discernible ripples in financial markets right now, but investors and analysts do seem to be paying much closer attention to the threat at a much earlier date than in past episodes, market watchers said.
Blame the intraparty battle between House Republicans that saw Kevin McCarthy elected speaker on Jan. 7 after a historic 15 ballots – and only after agreeing to a series of concessions to a small group of far-right conservatives.
Investors are “talking about it early because it came on the heels of a very difficult election of the speaker of the House and the sense that there’s now much more leverage that a few members of Congress may have to force this crisis that’s more likely to hit later in the summer,” said Christopher Smart, chief global strategist at Barings and head of the Barings Investment Institute, in a phone interview.
Some recent history underscores the concern. It took all of then-Speaker John Boehner’s political capital – “and then some” – to finally secure a vote among the Republican caucus on raising the debt limit during a similar showdown in 2011, Smart noted, observing that Boehner had “much more leeway” than McCarthy.
“So if there are five or more members who won’t vote” on raising the limit “without certain conditions being met,” it’s easy to imagine potentially ugly scenarios that could rattle markets, he said.
What’s at stake
Former Federal Reserve Bank of New York President Bill Dudley said Thursday in an interview with Bloomberg that a U.S. default would be a “huge blow” to markets, but also that a contingency plan exits if it happens.
“The way it works is if you actually run out of money, the Treasury will decide what payments to present to the Fed,” Dudley said. “Presumably, the Treasury will decide to prioritize debt repayment and interest payments, so there isn’t a technical default. The Fed will basically honor the payments the Treasury present.”
The Fed also could step in to shore up market functioning in the Treasury market, if needed.
“What we saw in 2011 is that the Treasury market got stronger until we got close to the deadline,” Dudley said. “People don’t want to buy Treasury bills that are maturing right around the time the debt limit could be binding.”
As a result of a 2011 debt-ceiling standoff, credit rating firm Standard & Poor’s downgraded the U.S. credit ratings to AA from AAA.
U.S. stocks declined for a third straight day on Thursday, with the Dow Jones Industrial Average
DJIA,
-0.76%
losing 252.40 points, or 0.8%, while the S&P 500
SPX,
-0.76%
shed 0.8% and the Nasdaq Composite Index
COMP,
-0.96%
dropped 1%.—Greg Robb contributed reporting to this article.
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Dow falls almost 400 points Tuesday, post biggest daily drop in 3 weeks
The Dow and S&P 500 closed lower on Tuesday to kick off a holiday-shortened week that has investors focused on mixed earnings reports from major banks. The Dow Jones Industrial Average
DJIA,
-1.14%
shed about 391 points Tuesday, or 1.1%, ending near 33,911, matching its biggest daily percentage drop since Dec. 28, according to a preliminary FactSet reading. The S&P 500
SPX,
-0.20%
fell 0.2% and the Nasdaq Composite Index
COMP,
+0.14%
rose 0.1%. Morgan Stanley
MS,
+5.91%
reported results that beat analyst expectations for the fourth-quarter, but those of Goldman Sachs
GS,
-6.44%
disappointed. Corporate earnings have been a key focus for investors monitoring signs of a looming U.S. economic recession, which could threaten the modest rally seen in stocks to kick off 2023. The yield on the 10-year Treasury rose 2.4 basis points to 3.543% on Tuesday, down from its one-year high of 4.360% in October, according to Dow Jones Market Data. -
U.S. stocks struggle for direction at the open as investors weigh Goldman, Morgan Stanley earnings
U.S. stocks struggled for direction at the open on Tuesday, as investors weighed earnings from Goldman Sachs Group Inc. and Morgan Stanley as trading resumed following a three-day weekend honoring Martin Luther King Jr. The Dow Jones Industrial Average
DJIA,
-0.94%
was down 0.2% soon after the opening bell, while the S&P 500
SPX,
-0.02%
edged up 0.1% and the Nasdaq Composite
COMP,
+0.11%
was trading about flat, according to FactSet data, at last check. Goldman Sachs and Morgan Stanley on Tuesday reported their results for the fourth quarter, with Goldman
GS,
-7.48%
missing earnings estimates while Morgan Stanley
MS,
+6.71%
beat analysts’ forecasts. In economic data released Tuesday, the New York Fed’s Empire State business conditions index, a gauge of manufacturing activity in the state, tumbled to the lowest level since the worst of the pandemic in 2020. -
Dow, S&P 500 end higher Friday, book best week of gains in two months
U.S. stocks booked modest gains Friday, while advancing for a second week in a row to kick off 2023. The Dow Jones Industrial Average
DJIA,
+0.33%
gained about 112 points, or 0.3%, ending near 34,302, while the S&P 500 index
SPX,
+0.40%
rose 0.4%, according to preliminary FactSet levels. The rate-sensitive Nasdaq Composite Index
COMP,
+0.71%
gained 0.7% Friday, while outperforming the week with a 4.8% gain. The Dow rose 2% for the week and the S&P 500 climbed 2.7%, the best week of gains on a percentage basis in two months, according to Dow Jones Market Data. The rally in stocks has been bolstered by inflation data that continued its retreat. The consumer-price index for December was pegged at a 6.5% annual rate, down from a 9.1% peak last summer. Investors on Friday heard from big banks JPMorgan Chase & Co.
JPM,
+2.52%
and Bank of America
BAC,
+2.20%
as they kicked off fourth-quarter earnings. Treasury Secretary Janet Yellen also warned top U.S. lawmakers that the government is expected to hit its ceiling for borrowing next week, while urging them to suspend or increase the debt limit. -
Dow closes up more than 100 points as earnings season begins, stocks book best week of gains in 2 months
U.S. stocks finished higher Friday, as investors weighed a flurry of bank earnings results for the fourth quarter and fresh data on consumer sentiment and inflation expectations.
All three major benchmarks also booked their best weekly percentage gains since Nov. 11, according to Dow Jones Market Data.
How stock indexes traded
-
The Dow Jones Industrial Average
DJIA,
+0.33%
rose 112.64 points, or 0.3%, to close at 34,302.61. -
The S&P 500
SPX,
+0.40%
added 15.92 points, or 0.4%, to finish at 3,999.09. -
The Nasdaq Composite
COMP,
-1.10%
gained 78.05 points, or 0.7%, to end at 11,079.16.
For the week, the Dow rose 2%, the S&P 500 advanced 2.7% and the Nasdaq gained 4.8% gain.
Read: Goldman Sachs sees these ‘prospective’ total returns across assets in 2023
What drove markets
Major stock indexes posted their best week of gains in two months on Friday after companies began reporting their fourth-quarter results, with big banks kicking off the earnings season.
No big surprises have come from the banks’ earnings results so far, with Bank of America Corp. and JPMorgan Chase & Co. indicating a potentially mild recession this year, according to Anthony Saglimbene, chief market strategist at Ameriprise Financial.
“I think the base case for most of the market right now is that we’re going to see a mild recession,” Saglimbene said in a phone interview Friday. “I don’t think anything that was said across bank earnings today surprised investors.”
Typically, the release of megabank earnings marks the unofficial start of the U.S. earnings reporting season, and market analysts will be watching closely this quarter for indications of how America’s largest companies are bracing for an expected economic downturn driven by higher interest rates.
JPMorgan
JPM,
+2.52% ,
Bank of America
BAC,
+2.20% ,
Wells Fargo & Co.
WFC,
+3.25%
and Citigroup
C,
+1.69%
were among banks that reported their fourth-quarter earnings Friday. JPMorgan was the top performer in the Dow Jones Industrial Average, with its shares closing 2.5% higher, FactSet data show.Earnings will continue to be a “big focus” for markets this month, according to Saglimbene. “Analysts took down estimates pretty aggressively in the fourth quarter,” he said. “So the bar is pretty low for companies. We’ll see if they can hurdle past that.”
In U.S. economic data released Friday, the University of Michigan consumer sentiment index climbed in January to its highest level in nine months, as expectations for the rate of inflation one year out moderated.
“Signs that inflation has peaked and is moderating slowly kind of eases some of the anxiety that we’re going to see runaway inflation this year,” said Saglimbene.
A reading from the consumer-price index on Thursday showed U.S. inflation fell in December. Many investors are expecting that the Federal Reserve will slow its pace of interest rate hikes this year as the cost of living has cooled.
Read: Inflation slows again and clears path for slower Fed rate hikes
Stocks on Thursday pushed higher after St. Louis Federal Reserve Bank President James Bullard said the probability of a soft landing for the economy has increased due to “encouraging” inflation data.
Steve Sosnick, chief strategist at Interactive Brokers, said by phone Friday that he still favors consumer-staples stocks and companies with “more steady streams than more cyclical streams” of income. “If you’re looking at an economy that’s likely to slow down, it’s really hard for me to think that somehow ‘the cyclicals’ will be immune from the economic cycle,” he said.
Read: Why earnings season could be a ‘market-moving event’
Companies in focus
-
JPMorgan
JPM,
+2.52%
shares gained 2.5% after reporting fourth-quarter earnings and revenue before the bell that topped Wall Street expectations. The bank said a mild recession is now the “central case.” -
Wells Fargo
WFC,
+3.25%
shares rose 3.3% after reporting falling profits, as it was hit by a recent settlement and the need to build reserves. -
Bank of America
BAC,
+2.20%
shares gained 2.2% after reporting earnings per share of 85 cents last quarter, above the 77 cents a share expected by analysts. Revenue also beat expectations. However, the bank’s net interest income fell slightly below expectations despite jumping interest rates. -
Delta Air Lines Inc.
DAL,
-3.54%
reported fourth-quarter profit and revenue before the bell that beat expectations. Shares of the airline fell 3.5%. -
Tesla Inc.
TSLA,
-0.94%
shares fell after the company cut prices in the U.S. and Europe again, according to listings on the company’s website Thursday night. Tesla finished down 0.9%. -
Shares of UnitedHealth Group Inc.
UNH,
-1.23%
dropped 1.2% after the health-insurance giant shared its results. -
BlackRock Inc.
BLK,
+0.00%
shares closed about flat after the asset-management giant reported a decline in fourth-quarter results.
—Barbara Kollmeyer contributed to this article.
-
The Dow Jones Industrial Average
-
Dow ends more than 200 points higher as inflation cools in line with forecasts
Stocks ended a choppy session with gains Thursday, finding support after the December consumer-price index showed inflation continued to slow, in line with forecasts, last month. The data appeared to reinforce market expectations the Federal Reserve will move slower to raise rates in 2023 after last year’s aggressive tightening. Skeptics contend bulls are underestimating the Fed’s resolve to hike the fed-funds rate, now at 4.25% to 4.5%, and above 5% and keep it there. The Dow Jones Industrial Average
DJIA,
+0.64%
ended around 217 points higher, up 0.6%, near 34,190, according to preliminary figures. The S&P 500
SPX,
+0.34%
finished with a gain of 0.3%, near 3,983, while the Nasdaq Composite
COMP,
+0.64%
advanced 0.6% to close near 11,001. -
Dow, S&P 500 book second day of gains ahead of Thursday’s inflation update
U.S. stocks booked a second straight day of gains on Wednesday a day before investors expect a fresh reading on consumer inflation to show another monthly decline from the summer peak. The Dow Jones Industrial Average
DJIA,
+0.80%
rose about 268 points, or 0.8%, ending near 33,972, while the S&P 500 index
SPX,
+1.28%
booked a 1.3% gain, with both clinching a second day in a row of gains, according to FactSet. Still, the standout has been the rate-sensitive Nasdaq Composite Index
COMP,
+1.76%
with a 1.8% increase on Wednesday that marked its fourth straight daily gain, and its longest win streak in four months, according to Dow Jones Market Data. The rally in equities comes as Treasury rates again edged lower on Wednesday, with the benchmark 10-year yield near 3.554% at 3 p.m. Eastern. It hit a peak yield in October of 4.231%. A fresh reading on inflation from the monthly consumer-price index is expected on Thursday to show the cost of living falling to a 6.5% annual rate in December, after it peaked at 9.1% in June. -
Why Thursday’s U.S. CPI report might kill stock market’s hope of inflation melting away
A mild stock market rally to kick off the new year will be put to the test Thursday when investors face a highly-awaited U.S. inflation reading which could well help determine the size of the Federal Reserve’s next interest-rate increase.
The December CPI reading from the Bureau of Labor Statistics, which tracks changes in the prices paid by consumers for goods and services, is expected to show a 6.5% rise from a year earlier, slowing from a 7.1% year-over-year rise seen in the previous month, according to a survey of economists by Dow Jones. The core price measure that strips out volatile food and fuel costs, is expected to rise 0.3% from November, or 5.7% year over year.
See also: Inflation is slowing, CPI to show. But is it slowing fast enough for the Fed?
The December CPI will be particularly important for influencing the Fed’s decision in its upcoming meeting which concludes February 1, said economists at Pimco. They expect the inflation and labor market data will have moderated sufficiently will push the central bank to pause rate hikes before their May meeting.
“After hiking 50 basis points at the December meeting, we expect the Fed moves to a 25bp hiking pace in early February, and ultimately pause around 5%,” wrote Pimco’s economists Tiffany Wilding and Allison Boxer, in a Tuesday note.
However, since the Fed’s December meeting, officials have relentlessly signaled the central bank will need to raise interest rates above 5% in order to get inflation to the 2% target, with no interest rate cuts expected this year. Fed funds futures traders now see a 78% likelihood of a 25 basis point hike at its February meeting, and a 68% chance of another in March, which would bring the terminal rate to merely 4.75-5% by mid-year, according to the CME FedWatch tool.
MarketWatch Live: U.S. stocks book more gains a day ahead of inflation report
After two lower-than-expected CPI readings, which have given the market hope that inflation will melt away quickly, the December reading for inflation is essential to keep alive the market’s hopes for falling inflation, Michael J. Kramer, founder of Mott Capital Management said in a Monday note.
“Inflation swaps currently see inflation falling below 2.5% by the summer of 2023, which seems hopeful,” Kramer said. “This week’s CPI reading will be essential in maintaining that view and could prove disastrous if CPI comes in hotter than expected, veering market-based inflation expectations off course.”
The stock market is looking for an “around 5%” increase in December’s core inflation, said Rhys Williams, chief strategist at Spouting Rock Asset Management. “If you get a number in the low four [percent], the stock-market rally will continue. The market is very hyper-focused on data points.”
U.S. stocks had a positive start to 2023 with hopes that cooling inflation and a potential recession may persuade the central bank to ease off the pace at which it is raising its policy interest rate.
Williams thinks inflation is coming down but it will not hit the central bank’s 2% mark by summer 2023.
“I think at some point the markets will realize, ‘oh we can’t get to 2%,” and then the markets probably do sell off on that. I think maybe in short term [the stocks go] up and then in the second quarter, they go back down as people realize that 2% is not realistic,” Williams told MarketWatch via phone.
U.S. stock indexes ended higher on Wednesday. The S&P 500
SPX,
+1.28%
was up 1.3%, while the Dow Jones Industrial Average
DJIA,
+0.80%
gained 0.8% and the Nasdaq Composite
COMP,
+1.76%
advanced 1.8%. -
U.S. stocks open higher, building on gains ahead of inflation report
U.S. stocks opened higher on Wednesday, building on their gains from the prior session ahead of Thursday’s closely watched inflation report. The S&P 500
SPX,
+1.28%
gained 15 points, or 0.4%, to 3,935. The Dow Jones Industrial Average
DJIA,
+0.80%
rose by 124 points, or 0.4%, to 33,828. The Nasdaq Composite
COMP,
+1.76%
gained 34 points, or 0.3%, to 10,777. -
Dow books near 200-point gain Tuesday as stock extend modest 2023 rally
U.S. stocks closed higher Tuesday, shaking off earlier weakness to end near the session’s high, while extending a modest advance in the first two weeks of 2023. The Dow Jones Industrial Average
DJIA,
+0.56%
gained about 187 points, or 0.6%, ending near 33,705, slightly below the session’s high. The S&P 500 index
SPX,
+0.70%
advanced 0.7% and the rate-sensitive Nasdaq Composite Index
COMP,
+1.01%
closed up 1%, according to FactSet. While investors didn’t hear much from Federal Reserve Chairman Powell, who was speaking Tuesday from Sweden, on the central bank’s next likely policy steps, stock-market bulls hoping for a soft landing for the economy were able to add to modest gains so far in January. Investors will be tuned into a monthly update on inflation on Thursday from the consumer-price index, which in recent months has shown a retreat from a peak annual rate above 9% this summer. Corporate earnings season also kicks off with major banks posting fourth-quarter results starting Friday. The Dow was up 1.7% on the year through Tuesday, while the S&P 500 gained 2.1% and the Nasdaq rose 2.6%. -
U.S. stocks end mostly lower Monday despite tech gains
U.S. stocks finished mostly lower Monday, with the Dow Jones Industrial Average giving up gains earlier in the session while a rise in technology shares failed to keep the S&P 500 in positive territory. The Dow
DJIA,
-0.34%
ended 0.3% lower, while the S&P 500
SPX,
-0.08%
edged down 0.1% and the technology-heavy Nasdaq Composite
COMP,
+0.63%
gained 0.6%, according to preliminary data from FactSet. The S&P 500’s information technology sector booked the biggest gains in the index, at around 1.1%, while the healthcare sector suffered the largest losses with a 1.7% slide. -
U.S. stocks rise to 3-week highs as traders build on Friday’s rally
U.S. stocks opened at their highest levels since mid-December on Monday as the main indexes built on gains that followed the release of monthly jobs data from the Department of Labor. The S&P 500
SPX,
-0.08%
gained 21 points, or 0.6%, to 3,916. The Dow Jones Industrial Average
DJIA,
-0.34%
advanced 133 points, or 0.4%, to 33,764. The Nasdaq Composite
COMP,
+0.63%
rose 105 points, or 1%, to 10,674. Stocks logged their biggest daily advance for the year so far on Friday after signs of slowing wage growth from the monthly jobs report added to the notion that inflation is slowing, while the pace of job creation — while slower than the prior month — remained relatively robust, suggesting the U.S. economy is taking the Federal Reserve’s rate hikes in stride. -
House to hold 15th ballot for speaker after McCarthy short by one vote in 14th vote
A 15th round of voting for speaker of the U.S. House of Representatives looked set to start late Friday, after the chamber failed to select a speaker in its 14th vote. With 432 House lawmakers voting in a 14th ballot, top House Republican Kevin McCarthy got 216 votes, or one vote short of a majority, so a 15th ballot will be needed to select a speaker.
-
Dow gains 700 points as stocks log biggest advance in 5 weeks
U.S. stocks logged their biggest daily advance in more than 5 weeks on Friday as investors reacted to data showing the labor market and wage growth finally starting to cool. The S&P 500
SPX,
+2.28%
gained roughly 87 points, or 2.3%, to finish at 3,895 as the index snapped a four-week losing streak. The Dow Jones Industrial Average
DJIA,
+2.13%
climbed 700 points, or 2.1%, to finish at roughly 33,630. The Nasdaq Composite
COMP,
+2.56%
advanced 264 points, or 1.6%, 10,569. Labor Department data showed the U.S. economy added 233,000 jobs last month, which was fewer than the prior month, while beating economists’ expectations for 200,000 new jobs. Wages grew by a modest 0.3% last month. -
House adjourns until 10 p.m. Eastern as speaker election remains unresolved
The U.S. House of Representatives voted Friday to adjourn until 10 p.m. Eastern, as the chamber’s Republican leaders sought a break during their push to get California Rep. Kevin McCarthy elected as speaker. McCarthy picked up some support Friday in the latest rounds of voting for speaker of the House, though it wasn’t sufficient to give him the job so another ballot was expected.
-
Dow up 500 points as pace of jobs growth, wage gains cools in December
U.S. stocks advanced Friday, with the Dow rising 500 points, as monthly Labor Department data showed the pace of job creation cooled in December while wage gains slowed, fueling hopes that the Federal Reserve’s interest rate hikes are starting to have the desired effect.
How are stocks trading
-
The S&P 500
SPX,
+1.85%
gained 61 points, or 1.6%, to 3,869. -
Dow Jones Industrial Average
DJIA,
+1.85%
climbed 528 points, or 1.6%, to 33,458. -
Nasdaq Composite
COMP,
+2.93%
advanced 155 points, or 1.5%, to 10,460.
After several sessions of choppy trade stocks finished lower on Thursday. However, thanks to Friday’s strong rebound, the S&P 500 is on track to finish the week in the green after four consecutive weekly declines.
What’s driving markets
Stock-market bulls cheered Friday’s jobs report, which showed that the pace of job creation and wage growth cooled last month, contradicting labor-market data released earlier in the week.
The December nonfarm payrolls report showed 223,000 jobs were created in December, above expectations for 200,000 new jobs, though the pace of job creation slowed from 256,000 during November. Wages grew by just 0.3% in December, down from 0.4% a month earlier.
See: U.S. adds 223,000 jobs in December and jobless rate matches 55-year low of 3.5%
While stocks advanced in the wake of the data, it seems the labor market has continued to confound expectations for an imminent recession, market analysts said. While the pace of wage growth has slowed slightly, workers continued to command higher pay, even if wages have lagged headline inflation.
“This is not going to push the Fed off its agenda one iota,” said Brad Conger, deputy chief investment officer at Hirtle, Callaghan & Co., in commentary about Friday’s data.
Numerous Fed officials have made clear that they want to see unemployment climb in order to help suppress inflation and engineer a return to the Fed’s 2% target. Senior Fed officials expect unemployment to rise by nearly a percentage point in 2023, according to projections released in December.
“The release was a win-win from the Fed’s perspective, as it signaled that wage inflation is moderating while job growth remains steady,” said Peter Essele, Head of Portfolio Management, Commonwealth Financial Network. “Coupled with the fact that headline inflation continues to move in the right direction, there’s a growing chance the Fed may be able to navigate a soft landing in the economy. If it meets its target, 2023 could be one of the best years for markets given the amount of negative investor sentiment currently weighing on prices.”
The S&P 500 index is down more than 19% from its 52-week high after the Fed raised interest rates by 4.25 percentage points in 2022 in an attempt to crush inflation that hit a four-decade high of 9.1% in June, according to the consumer-price index.
Jobs data released earlier in the week painted a picture of a labor market that had remained robust despite the Fed’s best efforts, and it’s not clear whether Friday’s data have meaningfully changed this perception, market strategists said.
JOLTS data released Tuesday showed more than 10 million jobs remained open. Analysts noted that the ADP private sector employment report released on Thursday was stronger than expected, which triggered a selloff in stocks.
Later Friday morning in New York, the ISM services sector index for December turned negative for the first time since May 2020, indicating a slowdown in the all-important services sector. The ISM services index slowed to 49.6% in December from 56.5%, below forecast.
The drumbeat of cautious Fedspeak continued on Friday, with Federal Reserve Governor Lisa Cook saying that inflation “remains far too high, despite some encouraging signs lately.” The pace of inflation has cooled in recent months, according to the consumer-price index.
Atlanta Fed President Raphael Bostic said on CNBC Friday that the December jobs data “doesn’t really change my outlook at all.”
A number of other Fed speakers are expected Friday, including Richmond Fed President Tom Barkin at 12:15 p.m. and Kansas City Fed President Esther George at 1 p.m.
Single-stock movers
- Technology stocks may be under pressure on Friday after Samsung Electronics KR:005930 said quarterly profits fell to an eight-year low as it saw weaker demand for chips and smartphones.
-
Southwest Airlines Co.
LUV,
+2.51%
shares are worth watching after the airline warned Friday that it expects to report a surprise net loss for the fourth quarter after canceling thousands of flights over the holidays. - Tesla Inc. shares are sinking lower after the electric vehicle maker cut prices in China again.
-
World Wrestling Entertainment
WWE,
+22.56%
shares soared as founder Vince McMahon returned to the company. -
Shares of Bed Bath & Beyond Inc.
BBBY,
-21.60%
slumped as the company said it was likely to file for bankruptcy. -
Costco Wholesale Corp.
COST,
+6.77%
shares climbed on strong holiday sales.
-
The S&P 500
