Daily Markets: Investor Focus Turns to Jobs, The Fed
Today’s Big Picture
Asia-Pacific equity markets finished the day down across the board after yesterday’s US market Technology sector misstep except for China’s Shanghai Composite which gained 0.17%. India’s SENSEX fell 0.74%, Hong Kong’s Hang Seng declined 0.85%, Australia’s ASX All Ordinaries gave back 1.40%, and Taiwan’s TAIEX slid 1.65%. South Korea’s KOSPI closed 2.34% lower in a mixed day that saw Commercial Services and Energy Materials names lead that market lower. Japan’s markets are closed again today for a market holiday and will be open for trading tomorrow. European markets are lower in midday trading and U.S. equity futures point to a lower open later this morning.
Treasury yields, including those for the closely watched 10-year, are moving higher again this morning ahead of this morning’s December ISM Manufacturing PMI data and the November JOLTS Job Openings Report. Those back to back reports out at 10 AM ET will give the market a fresh look at the vector and velocity of the U.S. economy. Following yesterday’s December Manufacturing PMI from S&P Global that found selling prices increased at the fastest rate since April, investors will be engrossed in findings from ISM on inflation and manufacturing activity. Even though the November JOLTS data is a bit of a rear-view perspective, the number of job openings reported will indicate the vitality of the jobs market and wage pressures.
Those morning reports will set the tone for the 2 PM ET publication of the Fed’s December policy meeting minutes. Exiting that meeting the Fed shared its updated economic projections that call for three rate hikes in 2024, half what the market is expecting. The meeting minutes will give us a behind the scenes look at that Fed rate cut conversation and could reveal what could spur the Fed to more aggressively cut rates or go at a slower pace. Recent Fed comments have suggested the Fed may not begin cutting rates until 2H 2024. Should the meeting minutes reinforce that view and the December ISM report confirm slower than expected progress on inflation, investors are likely to question rate cut expectations that helped fuel the market’s rapid rise in November and December.
Data Download
International Economy
There are no market moving international economic data points being released today.
Domestic Economy
In addition to the trifecta of data points discussed above, at 7 AM ET the latest figures for the weekly MBA Mortgage Application Index will be published. With mortgage rates falling, we could see a pick up in originations, but investors in homebuilding and related stocks will want to delineate between new mortgage activity and refinancing.
Markets
It looks like the recent whispers about Technology being overbought turned into an actual conversation yesterday as the sector traded off 2.62%. That’s a fair sized number but when you consider the market capitalization represented in the sector, it should be no surprise that broad market indexes suffered. Aside from the Dow which posted a 0.07% gain, The S&P 500 was down 0.57%, the Nasdaq Composite fell 1.63% and even the Russell 2000 gave up 0.70%. It wasn't all gloom and doom as Consumer Staples (1.12%) Utilities (1.45%) and Healthcare (1.76%) had a good day but it was not enough to counter Technology, and Communications Services, which also fell 0.56%.
Despite Consumer Discretionary shedding 0.93% gaming names had a good day as Las Vegas Sands Corporation (LVS) [4.31%], Wynn Resorts (WYNN) [3.83%], Caeser’s (CZR) [1.92%] and MGM Resorts (MGM) [1.79%] all popped. Here’s how the major market indicators stack up year-to-date:
- Dow Jones Industrial Average: 0.07%
- S&P 500: -0.57%
- Nasdaq Composite: -1.63%
- Russell 2000: -0.70%
- Bitcoin (BTC-USD): 6.79%
- Ether (ETH-USD): 2.48%
Stocks to Watch
UniFirst (UNF) is expected to release its quarterly earnings before equities begin trading later this morning. Pre-market breadth is healthy today as 286 names in the S&P 500 have traded hands so far this morning with 60 gainers and 226 decliners. Stocks trading higher in pre-market trading include Alvotech (ALVO), Bloomin’ Brands (BLMN) (more below), and Pure Storage (PSTG) (more below). Equities trading off this morning include the shares of Marathon Digital (MARA), Compass Pathways (CMPS), ODP Corp. (ODP), Altus Power (AMPS), and SoFi Technologies (SOFI)
According to data reported by the China Passenger Car Association, Tesla’s (TSLA) China-made sales soared 68.7% YoY (+14.2% MoM) in December to 94,139 vehicles. For 2023, Tesla sold 947,742 China-made vehicles, up 33.32% YoY.
Shares of Blomin’ Brands were moving higher following the appointment of Dave George, former COO of Darden Restaurants, and Jon Sagal, Partner at Starboard Value, to its board of directors.
JM Smucker (SJM) closed on the sales of its Bick's pickles, Habitant pickled beets, Woodman's horseradish and McLarens pickled onions Canadian brands to TreeHouse Foods (THS).
Reports suggest Airbus (EADSF) is considering the acquisition of French digital solutions company Atos' (AEXAF) data and cybersecurity division BDS for ~$2 billion.
Pure Storage will replace Patterson Companies (PDCO) in the S&P MidCap 400, and Patterson Companies will replace Chico's FAS (CHS) in the S&P SmallCap 600 before the start of trading on Friday, January 5. Sycamore Partners is acquiring Chico's FAS in a transaction expected to be completed on or about that date pending final conditions.
IPOs
Readers who want to dig deeper into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.
After Today’s Market Close
Cal-Maine Foods (CALM), Resources Connection (RGP), and Simulations Plus (SLP) are expected to report quarterly results after equities stop trading today. Those looking for more on upcoming quarterly earnings reports should head on over to Nasdaq’s Earnings Calendar.
On the Horizon
Thursday, January 4
- China: Caixin Services PMI - December
- Eurozone: HCOB Services PMI - December
- UK: S&P Global/CIPS Services PMI - December
- US: Challenger Job Cuts Report - December
- US: ADP Employment Change Report - December
- US: Weekly Initial & Continuing Jobless Claims
- US: Weekly EIA Natural Gas Inventories
- US: Weekly EIA Crude Oil Inventories
Friday, January 5
- Eurozone: Inflation Rate (Flash) - December
- US: Employment Report - December
- US: ISM Services PMI - December
- US: Factory Orders - November
Thought for the Day
“The hardest thing to learn in life is which bridge to cross and which to burn.” - Bertrand Russell
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Other Topics
Stocks Economy Central Banks Smart Investing Jobs & Unemployment
Chris Versace
Christopher (Chris) Versace is the Chief Investment Officer and thematic strategist at Tematica Research. The proprietary thematic investing framework that he’s developed over the last decade leverages changing economic, demographic, psychographic and technology landscapes to identify pronounced, multi-year structural changes. This framework sits at the heart of Tematica’s investment themes and indices and builds on his more than 25 years analyzing industries, companies and their business models as well as financial statements. Versace is the co-author of “Cocktail Investing: Distilling Everyday Noise into Clear Investing Signals” and hosts the Thematic Signals podcast. He is also an Assistant Professor at NJCU School of Business, where he developed the NJCU New Jersey 50 Index.
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Mark Abssy
Mark Abssy is Head of Indexing at Tematica Research focused on index and Exchange Traded Product development. He has product development and management experience with Indexes, ETFs, ETNs, Mutual Funds and listed derivatives. In his 25 year career he has held product development and management positions at NYSE|ICE, ISE ETF Ventures, Morgan Stanley, Fidelity Investments and Loomis Sayles. He received a BSBA from Northeastern University with a focus in Finance and International Business.
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