Stocks gain as December jobs report comes in strong

Stocks gain as December jobs report comes in strong

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Stocks bounced back on Friday as investors digested more strong labor market data that will play into expectations for interest-rate cuts.

The Dow Jones Industrial Average (^DJI) edged up 0.3% or about 120 points. The benchmark S&P 500 (^GSPC) climbed 0.5% while the tech-heavy Nasdaq Composite (^IXIC) advanced 0.6% Despite the morning gains, stocks are poised to end a nine-strong run of weekly wins,

The major indexes initially split paths after the release of the December US jobs report, which showed the US economy added 216,000 jobs in December, higher than the 175,000 expected by economists. The unemployment rate was unchanged at 3.7%.

Stocks have slumped in the first week of 2024 in a marked reversal of a roaring rally powered by high hopes the Federal Reserve will soon start easing monetary policy. But doubts have set in about whether policymakers are prepared to pivot, and traders have scaled back bets on a March rate cut.

After the release of Friday’s payrolls report, investors’ bets on a rate cut by the Fed’s March meeting were roughly 50-50, according to data from the CME Group, down sharply from last month.

Read more: What the Fed rate-hike pause means for bank accounts, CDs, loans, and credit cards

Against that backdrop, US bond yields continued to rise, with the 10-year Treasury yield (^TNX) up 3.7 basis points to 4.04% after surging Thursday.

Elsewhere, iPhone supplier Foxconn (2354.TW) said it expects revenue to drop in the first quarter amid slower market demand. Apple (AAPL) shares slipped in premarket trading, adding to losses after two analysts downgraded the iPhone maker on concerns about sales of its next smartphone.

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  • Investors expect rate cuts even after hot jobs report

    Fresh labor market data caught Wall Street by surprise.

    The labor market added 216,000 jobs in December, up from 173,000 in the previous month, and surpassing expectations from economists surveyed by Bloomberg, who had forecasted 175,000.

    While at first glance the data reflects good news for workers and the businesses hiring them, the robust figures also complicate expectations for the Federal Reserve’s interest rate policy for the months ahead.

    “Friday’s jobs report was so strong that it likely delays the timing of the Federal Reserve’s eventual rate cuts,” said Jeremy Straub, CEO and chief investment officer, of Coastal Wealth. “Clearly, the economy is strong enough as of now to withstand the Fed’s currently elevated interest rates.”

    For much of Wall Street, an end to the Fed’s tightening campaign will be a victory for the economy, and specifically for investors who have been squeezed by higher interest rates, which increase the cost of borrowing and restrict growth.

    The hot jobs report may have initially rattled expectations for rate cutting, but investors are still leaning towards the possibility that the Fed will cut rates at its March 20 meeting.

    Investors are pricing in about a 74% chance of a rate cut after the March meeting, according to the CME FedWatch Tool.

  • Stocks edge higher after strong jobs report surprises Wall Street

    Stocks opened slightly higher Friday as investors looked for direction after a strong jobs report rattled expectations for the Federal Reserve cutting interest rates.

    The surprisingly hot jobs report could pressure the Fed to hold rates steady and delay its first rate cut, pushing away hopes that the tightening campaign has come to an end.

    The Dow Jones Industrial Average (^DJI) rose just above the flatline. The benchmark S&P 500 (^GSPC) climbed 0.3%, while the tech-heavy Nasdaq Composite (^IXIC) advanced 0.2%

  • US economy adds 216,000 jobs in December, sending stocks lower

    The US economy added 216,000 jobs in December, while the unemployment rate remained unchanged at 3.7%, according to the Bureau of Labor Statistics.

    Yahoo Finance’s Josh Schafer has all the details here.

    Stocks moved lower after the report as traders scaled back bets on a rate cut from the Federal Reserve. All three indexes were down over 0.4% in premarket trading.

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