Mixed close for Wall Street as job openings suggest slowing economy
December 5, 2023 – 1:50 PM PST
(Reuters) – Wall Street finished mixed on Tuesday after fresh employment data bolstered bets that the U.S. Federal Reserve will cut interest rates as soon as March.
Wall Street’s most valuable companies rose as Treasury yields dipped to multi-month lows. Nvidia (NVDA.O) and Apple (AAPL.O) rose more than 2%, while Amazon.com (AMZN.O) and Tesla (TSLA.O) gained more than 1%.
Most S&P 500 sector indexes ended down after data showed U.S. job openings dropped in October to the lowest level since early 2021, indicating that the labor market was easing.
“As interest rates rise and as demand slows, companies are pulling back on job openings, which is essentially what the Fed wants,” said Sam Stovall, chief investment strategist at CFRA Research in New York.
“The Fed probably is done raising rates, and the only question outstanding is when they start to cut,” Stovall said.
Another report showed U.S. services sector activity picked up in November.
The S&P 500 declined 0.06% to end the session at 4,567.18 points.
The Nasdaq gained 0.31% to 14,229.91 points, while Dow Jones Industrial Average declined 0.22% to 36,124.56 points.
The small-cap Russell 2000 index (.RUT) fell 1.4%, ending a four-day winning streak.
Volume on U.S. exchanges was relatively heavy, with 11.9 billion shares traded, compared to an average of 10.6 billion shares over the previous 20 sessions.
Of the 11 S&P 500 sector indexes, eight declined, led lower by energy (.SPNY), down 1.7%, followed by a 1.37% loss in materials (.SPLRCM).
U.S. stock trading this week has been uneven after the S&P 500 rebounded nearly 9% in November. The index on Friday touched a four-month intra-day high.
Stock market investors widely expect the Fed will keep rates unchanged at its meeting next week. Interest rate futures also suggest a 65% probability of a rate cut by the Fed’s March meeting, according to the CME Group’s FedWatch tool.
On Friday, the more comprehensive non-farm payrolls report for November will offer greater clarity on the state of the labor market.
Global markets will be swayed by greater volatility in 2024 as the Fed cuts benchmark interest rates fewer times than futures markets are pricing in, strategists at the BlackRock Investment Institute predicted in a panel discussion. Take-Two Interactive Software (TTWO.O) dipped 0.5% after a trailer of the latest installment of its best-selling “Grand Theft Auto” videogame franchise was released.
CVS Health (CVS.N) jumped 3.7% after forecasting 2024 revenue above Wall Street estimates, as the insurer expects to benefit from its expansion into health services.
Declining stocks outnumbered rising ones within the S&P 500 (.AD.SPX) by a 4.5-to-one ratio.
The S&P 500 posted 15 new highs and no new lows; the Nasdaq recorded 83 new highs and 69 new lows.
Reporting by Amruta Khandekar and Shristi Achar A in Bangalore and by Noel Randewich in Oakland, Calif.; Editing by Pooja Desai and Aurora Ellis
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What factors contributed to the decline in most sector indexes of the S&P 500 on December 5, 2023?
The article discusses the performance of Wall Street on December 5, 2023, and its reaction to fresh employment data that suggests a potential rate cut by the U.S. Federal Reserve in March.
The mixed performance of Wall Street reflects the uncertainty surrounding the future actions of the Federal Reserve. While some companies, such as Nvidia, Apple, Amazon.com, and Tesla, experienced gains, most sector indexes of the S&P 500 ended down. This decline can be attributed to the drop in U.S. job openings, which hit the lowest level since early 2021, indicating a slowdown in the labor market.
Sam Stovall, the chief investment strategist at CFRA Research in New York, explained that as interest rates rise and demand slows, companies are reducing job openings in accordance with the Federal Reserve’s intentions. Stovall suggests that the Federal Reserve may be finished with raising rates and the only question remaining is when they will start cutting them.
On a positive note, another report showed an increase in U.S. services sector activity in November. However, the overall market performance was mixed. The S&P 500 declined slightly, while the Nasdaq gained and the Dow Jones Industrial Average dipped.
The small-cap Russell 2000 index also fell, ending a four-day winning streak. Despite this, trading volume on U.S. exchanges was relatively heavy, indicating active market participation.
Among the S&P 500 sector indexes, eight declined, with energy and materials experiencing the largest losses. This decline follows a strong rebound of the S&P 500 in November, which saw a nearly 9% increase.
Looking ahead, investors widely expect the Federal Reserve to keep rates unchanged at its upcoming meeting. However, interest rate futures suggest a 65% probability of a rate cut by the March meeting, according to the CME Group’s FedWatch tool. The upcoming non-farm payrolls report for November will provide further clarity on the state of the labor market and may impact market sentiment.
In addition to domestic factors, global markets are also expected to experience greater volatility in 2024 due to fewer interest rate cuts by the Federal Reserve than what futures markets are currently pricing in, as predicted by strategists at the BlackRock Investment Institute. This prediction may impact stock performance and investor behavior.
In conclusion, the mixed performance of Wall Street on December 5, 2023, reflects the market’s reaction to fresh employment data and the potential for a rate cut by the Federal Reserve. While some companies experienced gains, most sector indexes of the S&P 500 declined. Investors are closely watching upcoming economic data and the actions of the Federal Reserve to gauge future market trends.
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