Three major indexes saw first negative week in 10 weeks, with Nasdaq seeing the biggest decline of ~3.25%. This was the worst weekly performance ever since the month of September. S&P 500 and Dow Jones saw a decline of ~1.52% and ~0.59%, respectively. Global indexes were seen fluctuating on Friday as traders continued to assess the economic data points to determine whether or not the US Fed will start reducing the interest rates. Analysts are also assessing when the apex bank will start to cut the rates.
But what was the main reason for this upward momentum? Was the increase led by big technology giants?
Stocks increased on favourable jobs report
Well, stronger economic data report supported the movement on Friday. Stocks increased on favourable jobs report as all the leading indexes closed higher. Index saw an increase of ~0.18% to close the session at ~4,697.24 levels, with Nasdaq Composite adding ~0.09% to close at ~14,524.07 levels. The Dow Jones Industrial Average inched up higher by ~25.77 points, or 0.07%, to settle at ~37,466.11 levels.
US economy was able to add more jobs than the expectations in the month of December, with non-farm payrolls increasing ~216,000. Economists tracked by Dow Jones were anticipating a gain of ~170,000 for previous month. Unemployment rate remained steady at ~3.7%, further emphasising about the continued labor strength.
Treasury yields touched higher
Due to this report, Treasury yields touched higher, with benchmark 10-Y rate reaching high of ~4.103%.
What could be the potential implications about the strong labour market? Strong labor market might prompt the US Fed to delay the rate cuts, which traders are expecting. Before the Friday’s data, traders hoped that the US Fed will start to cut their rates as early as March. They were also expecting that the apex bank might reduce the rates by as many as 6 times in the current year. With the release of this report, many believe that these expectations need to be revisited.
Since stocks increased on favourable jobs report, what’s more on investors’ wishlist in this uncertain economic environment?
Well, we believe that investors want 3 things: lower inflation, a stable and consistent job market and rapid rate cuts. However, it is expected that investors will only get 1 out of 3 items which are present on their wishlist. Weekly winning streak of S&P 500 to close the year was the longest in around 2 decades. This led to the benchmark’s gain for the year of ~24%.
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