December 1, 2023


Business&Finance Specialists

Stocks dip after mixed December jobs report

5 min read

Stocks closed the first trading week of 2022 in the red as investors digested a key report on the U.S. labor market recovery at the end of a volatile week. 

The S&P 500 and Dow ended Friday’s session flat, while the Nasdaq fell nearly 1%, with technology stocks coming under renewed selling pressure. The Nasdaq fell 4.5% for the week — its worst since February 2021. The S&P 500 posted a weekly loss of nearly 2%, while the Dow dropped 0.3% since last Friday. Treasury yields built on recent gains as investors’ expectations for higher interest rates mounted. The benchmark 10-year yield rose to about 1.8%.

Investors mulled the Labor Department’s December jobs report released Friday morning, providing an update on the extent to which labor supply shortages were still impacting the economy at the end of last year. A disappointing 199,000 jobs came back during December, unexpectedly slowing compared to the previous month. Other metrics, however, were more upbeat, as the unemployment rate improved to a fresh pandemic-era low of 3.9%, and the labor force participation rate steadied after an upward revision in November. Still, many economists cautioned that a more recent hit to the labor market from the surge in Omicron cases may not yet have been. captured in the December report. 

Heading into this print, U.S. stocks were already under pressure as investors reassessed the next likely moves by the Federal Reserve. With policymakers closely watching for signs that the economy has reached maximum employment, the jobs report could provide additional fodder for the Fed to double down on its more hawkish tilt, some pundits said. 

“This is a green light for March,” Neil Dutta, head of U.S. economics at Renaissance Macro Research, wrote in an email Friday morning, referring to the timing of an initial rate hike from the Fed. “The U3 unemployment rate plunged 0.3ppt [percentage points] to 3.9%, 0.4ppt below the Fed’s Q4 2021 estimate and only 0.4ppt above the Fed’s estimate for year end 2022. Average hourly earnings are coming in firm as the labor force participation rate remains flat.” 

The Fed’s December meeting minutes released earlier this week suggested some officials were inclined to speed their asset-purchase tapering and move up the timing of an initial interest rate hike from current near-zero levels. And in a surprise development to many market participants, some officials also suggested they were contemplating the start of reducing the nearly $9 trillion in assets on the central bank’s balance sheet. Such a move would quickly shift the markets away from the accommodative monetary policy backdrop that helped underpin risk assets during the pandemic. 

“The way I view it is very simple: The Fed delivered a wonderful year for markets in 2021, at the cost of a much more complicated outlook in 2022,” Mohamed El-Erian, president of Queens’ College at Cambridge University and Allianz Chief Economic Adviser, told Yahoo Finance Live on Thursday. “And that complicated outlook is for policy, is for the economy, and therefore is a more uncertain outlook for markets.” 

“This is still a very robust economy,” he added. “If we avoid a policy mistake — big if. But if we avoid a policy mistake, this economy has all the ingredients to continue growing and grow in a more inclusive manner. But we do need help on labor force participation and productivity. We do need help on the supply side.”

And despite this week’s volatility, some pundits struck an upbeat tone about future near-term catalysts for the market. 

“Within the U.S., we’re hopeful for fourth-quarter earnings. We think [they] should be fairly good,” Rob Haworth, U.S. Bank Wealth Management senior investment strategist, told Yahoo Finance Live on Thursday. “That said, the market does have to adjust to what is a surprise in terms of how aggressive the Federal Reserve may be in managing the economy around inflation.”

4:01 p.m. ET: Stocks end the week in the red

Here were the main moves in markets as of 4:01 p.m. ET:

  • S&P 500 (^GSPC): -19.03 (-0.41%) to 4,677.02

  • Dow (^DJI): -4.81 (-0.01%) to 36,231.66

  • Nasdaq (^IXIC): -144.96 (-0.96%) to 14,935.90

  • Crude (CL=F): -$0.36 (-0.45%) to $79.10 a barrel

  • Gold (GC=F): +$4.90 (+0.27%) to $1,794.10 per ounce

  • 10-year Treasury (^TNX): +3.8 bps to yield 1.7710%

11:08 a.m. ET: Netflix shares track toward longest losing streak since Sept. 2020, while Microsoft, Alphabet heads toward worst week since March 2020 

Mega-cap technology stocks came under additional pressure on Friday as investors increased their expectations for a near-term interest-rate hike by the Federal Reserve. 

Netflix shares (NFLX), which had been a darling of the stay-at-home trade, were on track to fall for a sixth straight day, marking its longest losing streak since September 2020. The stock has fallen by more than 20% from a record high of just over $700 in mid-November. And based on trading this week, the stock is on track for a weekly decline of just over 10% — its worst since September 2020.

Likewise, other heavily weighted technology stocks have also seen considerable selling pressure. Microsoft and Alphabet shares headed for weekly losses of more than 7.5% and 6%, respectively, or their worst weekly returns since March 2020.

9:55 a.m. ET: S&P 500 Financials sector ETF jumps to record high as investors bet on rate hikes  

The S&P 500 Financials sector exchange-traded fund (XLF) reached a record intraday high on Friday, marking its first since October as investors piled into bank stocks set to benefit from a rising interest-rate environment. 

The financials sector also was the biggest gainer in the S&P 500 on Friday, extending a streak of outperformance for the cyclical areas of the market in the first few sessions of 2022. Energy, financials and industrials have been the leaders in the blue-chip index since the start of the new year. 

9:31 a.m. ET: Stocks open lower after jobs report 

Here’s here markets were trading just after the opening bell Friday morning: 

  • S&P 500 (^GSPC): -3.36 (-0.07%) to 4,692.69

  • Dow (^DJI): -84.89 (-0.23%) to 36,151.58

  • Nasdaq (^IXIC): -15.78 (-0.14%) to 15,059.67

  • Crude (CL=F): -$0.02 (-0.03%) to $79.44 a barrel

  • Gold (GC=F): +$3.90 (+0.22%) to $1,793.10 per ounce

  • 10-year Treasury (^TNX): +1.7 bps to yield 1.75%

7:18 a.m. ET Friday: Stock futures extend gains

Here’s where markets were trading ahead of the opening bell Friday morning: 

  • S&P 500 futures (ES=F): +7.25 points (+0.15%), to 4,694.75

  • Dow futures (YM=F): +3 points (+0.01%), to 36,126.00

  • Nasdaq futures (NQ=F): +45.50 points (+0.3%) to 15,805.5

  • Crude (CL=F): +$0.51 (+0.64%) to $79.97 a barrel

  • Gold (GC=F): +$2.80 (+0.16%) to $1,792.00 per ounce

  • 10-year Treasury (^TNX): -0.6 bps to yield 1.727%

6:31 p.m. ET Thursday: Stock futures drift ahead of jobs report

Here were the main moves in markets during the overnight session:  

  • S&P 500 futures (ES=F): +9.5 points (+0.2%), to 4,697.00

  • Dow futures (YM=F): +57 points (+0.16%), to 36,180.00

  • Nasdaq futures (NQ=F): +45.25 points (+0.29%) to 15,804.25

Photo by: NDZ/STAR MAX/IPx 2021 12/30/21 People walk by the New York Stock Exchange (NYSE) on Wall Street on December 30, 2021 in New York.

Photo by: NDZ/STAR MAX/IPx 2021 12/30/21 People walk by the New York Stock Exchange (NYSE) on Wall Street on December 30, 2021 in New York.

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter

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