4:18pm: Investors react to jobs data
The Dow closed Friday up 26 points, less than 0.1%, at 37,466, the Nasdaq Composite added 14 points, 0.1%, to 14,524 and the S&P 500 gained 9 points, 0.2%, to 4,679. The small-cap Russell 2000 index declined 5 points, 0.3%, to 1,953.
Friday's gains were not enough to offset losses earlier in the week, however, and the three major indexes each snapped nine-week winning streaks.
Investors responded fairly well to the December jobs report, which showed that the US added 216,000 jobs last month compared to 170,000 expected.
"Coming into today, investors wanted three things: fading inflation, a stable job market and rate cuts," said Mike Bailey, director of research at FBB Capital Partners, as reported by CNBC. "However, I think coming out of today’s jobs number suggests to me that there’s some give and take here, and investors might only be getting one out of the three items on their wish list.”
12:05pm: Stocks in the green
US stocks moved higher at midday on Friday but not high enough to add another week to their winning streak after a weaker performance in the last few days.
“Global stock indices end their multi-week long winning streaks as investors pare back their expectations regarding the speed and extent of this year's anticipated rate cuts,” commented IG senior market analyst Alex Rudolph.
“US stocks help lift their European counterparts at the end of the week as the US labour market continues to show signs of strength, even though the services sector softens. Nonfarm payrolls increased by 216,000 jobs last month, handily beating expectations for a 170,000 gain.”
At noon, the Nasdaq led the gains, up 0.4% at 14,561 points.
The S&P 500 added 0.3% at 4,702 points while the Dow Jones was flat at 37,433 points.
9:40am: Stocks shrug off strong jobs report to push higher
Stocks shrugged off a strong jobs report to open marginally higher despite hopes of an early interest rate cut receding.
Shortly after the opening bell, the Dow Jones Industrial Average was a touch higher at 37,446.30, the S&P 500 was up 10.01 points, 0.2%, at 4,698.69 and the Nasdaq Composite was up 33.83 points, 0.2%, at 14,544.14.
Matthew Ryan, head of market strategy at Ebury, said the report should "take plenty of pressure off the Federal Reserve to begin lowering rates as soon as its March FOMC meeting."
Paul Ashworth, chief North America economist at Capital Economics agreed.
He thinks the payrolls number plus a second consecutive 0.4% month-on-month gain in average hourly earnings "means that this labour market report will trigger a further paring back of expectations for a March rate cut."
But he added, at this stage, all that really matters for the Fed is the CPI and PPI data, due next week, “which we expect to be more supportive of early action from the Fed.”
He pointed out the gain last month, was not quite as good as it looks at first glance.
“Gains in the preceding two months were revised down by a cumulative 71,000,” he explained, while the increase in December was once again concentrated in only a few non-cyclical sectors.
To the extent that it is still a leading indicator of broader employment trends, the 33,000 decline in temporary jobs is also a concern, he added.
8:41am: US economy adds more jobs than forecast in December, average earnings tick up
The jobs report has been released and it’s a strong number, sending futures a touch lower than before the release.
The US Bureau of Labor Statistics said nonfarm payroll employment increased by 216,000 in December, above the 170,000 consensus.
But figures for November and October were revised downwards - November to 173,000 from 199,000 and October to 105,000 from 150,000, meaning job additions in October and November combined were 71,000 lower than first reported.
The unemployment rate was unchanged at 3.7%, compared to expectations of a slight increase to 3.8%.
December non-farm payrolls stronger than expected across the board. pic.twitter.com/EmBzyyLDwh
— Gary Black (@garyblack00) January 5, 2024
Employment continued to trend up in government, health care, social assistance, and construction, while transportation and warehousing lost jobs, the report showed.
But average hourly earnings ticked up 0.4% in December from November, taking the annual increase to 4.1%.
Both figures were stronger than forecast.
The labor force participation rate, at 62.5%, and the employment-population ratio, at 60.1%, both decreased by 0.3 percentage point in December.
Alongsde the move in equity futures, the dollar has rallied as investors bet interest rates will not be cut in the near-term.
7:00am: Stocks called down ahead of jobs report
Wall Street is expected to open lower, ahead of the jobs report, as investors continue to dial back on early rate cut expectations.
In pre-market trading, futures for the Dow Jones Industrial Average were down 0.3%, while those for the S&P 500 were 0.3% lower and contracts for the Nasdaq 100 futures declined 0.4%.
Joshua Mahony at Scope Markets said the session “will be dominated by the latest jobs report, with markets looking for signs of weakness that might further embolden bulls over the potential for a March rate cut from the Fed.”
“Expectations of a rise in unemployment and weaker payrolls do highlight the possibility of a “bad news is good news” response from markets, with equity bulls hoping to see payrolls remain under pressure for the time being,” he added.
Goldman Sachs (NYSE:GS) estimates nonfarm payrolls rose 190,000 in December, above the market consensus of 175,000.
Its forecast reflects a favourable swing in the December seasonal factors worth roughly 50,000 and a boost from mild winter weather, as snowfall was minimal in major cities in the Northeast and Midwest.
It predicts that the unemployment rate will stay unchanged at 3.7%, compared to consensus of a rebound to 3.8% and estimates a 0.30% increase in average hourly earnings month-on-month that lowers the year-on-year rate by one tenth to 3.9%.
Elsewhere, US factory order figures are due for release.
Stocks to watch include Tesla, down 0.9% in pre-market.
The electric vehicle maker is recalling more than 1.6 million electric vehicles in China, the country's market regulator said Friday, marking another blow for the US firm days after it was surpassed in EV sales by China's BYD.
The recall – sparked by the discovery of problems with assisted driving functions and door-locking systems – will be conducted through remote over-the-air updates to the cars' software.
"Starting from now, a total of 1,610,105 imported Model S, Model X, and Model 3, and domestic Model 3 and Model Y electric vehicles with production dates between August 26, 2014 and December 20, 2023 will be recalled," the State Administration for Market Regulation said in an online statement.