Nasdaq Composite ends 3 percentage points from correction, as investors react to Fed, Friday’s jobs report

US stocks ended lower on Friday, in a turbulent session that ended with weekly declines for all three major benchmarks, following a monthly jobs report with a fine overall figure below the estimates of economists.

Analyzing the Labor Department report, investors appeared to conclude that the monthly jobs update would not derail the Federal Reserve’s intention to end its accommodative policies and possibly raise rates for fight inflation in 2022.

What were stock market indices doing?
  • The Nasdaq COMP Composite Index lost 144.96 points, or 1%, to close at 14,935.90, after hitting an intraday low of 14,877.63.

  • The Nasdaq Composite is about 7% below its recent high of 16,057.44 set on November 19.

  • The Dow Jones Industrial Average DJIA,
    lost 4.81 points, or less than 0.1%, to end at 36,231.66, after hitting an intraday low of 36,111.53.

  • The S&P 500 SPX index,
    slipped 19.02 points, or 0.4%, to end at 4,677.03, but touched a low of 4,662.74.

  • The Russell 2000 RUT Small Cap Index,
    closed 1.2% lower at 2,179.81.

On Thursday, the Dow Jones fell 171 points, or 0.5%, to 36,236, the S&P 500 slipped 0.1% and the Nasdaq Composite fell 0.1%.

Weekly statistics

  • For the week, the Nasdaq Composite fell 4.5%, its biggest weekly decline since February 26, the S&P 500 slipped 1.9% and the Dow Jones fell 0.3%. The Russell 2000 experienced a weekly slippage of 2.9%.

What drove the markets?

The Dow Jones Industrial Average struggled to hold onto modest gains in late Friday afternoon, ending the session in the red with other major stock indexes as investors assessed the latest data on the market. job.

The US economy created 199,000 jobs in December, the Labor Department reported on Friday, well below forecasts by economists polled by the Wall Street Journal for an increase of 422,000 for the month, highlighting some impact of the spread of the omicron variant of the coronavirus in the workforce.

While the headline count of the Jobs report was worse than expected, the economy still looked “hot” when you consider details such as falling unemployment rates and rising average hourly earnings, according to Bob Doll, chief investment officer of Crossmark Global Investments. .

Read: The US employment report is not as weak as it looks for the second month in a row. here’s why

The unemployment rate in the United States fell to 3.9% from 4.2%, while the average hourly wage jumped 19 cents, or 0.6%, to $ 31.31, according to the report on the job, proving a positive point for some.

“We have a strong economy and we have an inflation problem and the Fed is behind schedule,” Doll said by telephone on Friday. Jobs report gives Federal Reserve “more leeway to get started,” he said, highlighting market expectations for the Fed to start raising its benchmark interest rate this year .

Market participants may see Friday’s jobs report as lackluster but also not damaging enough to give central bankers a reason to put on hold what has been voiced as a plan to tighten financial policy earlier and further. quickly than expected.

“American employers have to pay to get people back into the workforce and this is something the Fed will take into consideration when reviewing the timeline for when to take its first step,” wrote Michael Hewson, market analyst Head of CMC Markets UK. , in a daily report.

Omicron poses “challenges” for participation in the labor market that are not fully addressed in Friday’s employment report as the spread of the variant accelerated after the collection of employment data , warned Luke Tilley, chief economist at Wilmington Trust, in a telephone interview on Friday. “It’s a very tight job market,” he said, citing struggles by companies to hire workers during the pandemic.

The jobs report also comes in a week in which the 10-year Treasury yield TMUBMUSD10Y,
jumped to around 1.8% – putting pressure on growth stocks and strengthening financials. The continued rise in public debt helped to put pressure on the yield-sensitive technology sector, weighing in particular on the technology-intensive Nasdaq Composite. Likewise, the Nasdaq-100 Large Cap NDX Index,
fell 4.5% in its biggest weekly drop since February last year.

Read: Value stocks have led growth in recent weeks. Is it a false head?

Financial shares SP500.40,
+ 1.15%
increased on Friday to bring their weekly gain to 5.4% but the energy SP500.10,
was the real winner, rising 10.6% for the week, with investors betting on cyclicals performing better in 2022 with the rate hike.

The moves came as San Francisco Fed President Mary Daly on Friday said she approved a gradual rate hike along with a unwinding of the bank’s roughly $ 9 trillion balance sheet. central, which she believes should occur earlier than the last round of normalization.

“I would rather see us adjust the policy rate gradually and move to balance sheet reduction sooner than we did in the last cycle,” Daly said at the American Economic Association’s annual meeting.

Which companies were the center of attention?
  • Actions of Gap Inc. GPS,
    were in the spotlight after Kanye West, now known as Ye, announced a partnership with luxury brand Balenciaga on a Yeezy collection that will be available at Gap. Shares of the retailer closed 2.4% lower on Friday.

  • Boot Barn Holdings Inc. BOOT rose 0.6% after the retailer pre-announced fiscal third quarter results, delivering numbers that exceeded Street’s expectations.

  • CinCor Pharma Inc. CINC, was flat in its market debut on Friday, after the Massachusetts-based biopharmaceutical firm’s initial public offering increased at a price of $ 16 per share, in the middle of the expected range of $ 15 to $ 17 per share. action.

  • Willis Towers Watson WLTW has announced that it will change its Nasdaq ticker symbol to “WTW” when markets open on Monday, January 10. Its stock fell 1.2%.

How did the other assets behave?
  • The 10-year Treasury bill yield rose 3.6 basis points on Friday to 1.769% for the biggest weekly gain since September 2019 based on 3 p.m. ET levels, according to Dow Jones Market Data. Treasury yields and prices move in opposite directions.

  • The ICE US Dollar DXY Index, a measure of the currency against a basket of six major rivals, fell 0.6% on Friday and 0.2% for the week.

  • CL00 oil futures fell, with West Texas Intermediate crude for February CLG22 delivery,
    falling 0.7% to $ 78.90 per barrel. Still, first month contract prices for the US benchmark index rose 4.9% for the week.

  • GC00 gold futures,
    + 0.41%
    for the February delivery GCG22,
    + 0.41%
    closed 0.5% higher to settle at $ 1,797.40 an ounce, but with the most active contract down 1.7% for the week.

  • Bitcoin BTCUSD was trading down around 2.8% to around $ 41,889.

  • The Stoxx Europe 600 SXXP closed 0.4% lower for a weekly slump of 0.3%, while London’s FTSE 100 UKX rose 0.5%, contributing to the weekly gain of 1.4% of the heavy resources index.

  • The Shanghai Composite SHCOMP fell 0.2% on Friday and recorded a weekly decline of 1.7%, while the Hang Seng HSI index rose 1.8%, helping it post a weekly gain of 0 , 4%, and Japan’s Nikkei 225 NIK ended flat but down 1.1% on the week.

—Steve Goldstein contributed to this report.


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