April 12, 2024
Finance

Stocks lose momentum as December jobs report comes in strong


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

The Dow Jones Industrial Average (^DJI) slipped below the flatline during the afternoon session. The benchmark S&P 500 (^GSPC) climbed 0.1% while the tech-heavy Nasdaq Composite (^IXIC) advanced about 0.2%.

The major indexes traveled both ways throughout the day 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%.

Separate data from Institute for Supply Management (ISM) showed services activity slowed in December. Its services PMI for the month came in at 50.6, down from November’s reading of 52.7. While a reading above 50 indicates expansion, the December figure marked the lowest level for services activity since May.

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.

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 about 6 basis points to 4.05% 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 afternoon trading, adding to losses after two analysts downgraded the iPhone maker on concerns about sales of its next smartphone.

Live6 updates

  • Stocks trending in afternoon trading

    Here are some of the stocks leading Yahoo Finance’s trending tickers page during afternoon trading on Friday:

    Peloton (PTON): Shares of the connected fitness company continued to climb on Friday afternoon, riding the momentum after the company announced a partnership with TikTok, in which Peloton content will be featured on a dedicated fitness hub on the social media platform.

    Palantir (PLTR): Shares sank 2% after Jefferies downgraded the stock to “Underperform” from a “Hold” rating, while slashing its price target to $13 per share from $18. Jefferies Analyst Brent Thill writes that Palantir still has a long-term AI advantage through the trends of “AI euphoria.”

    Constellation: (STZ) — The parent company behind popular beer brands Modelo and Corona rose 2% Friday afternoon after reporting overall sales figures that fell below expectations for its fiscal third-quarter earnings, but posted boosted profits and sales growth for beer.

    Costco (COST): Shares ticked up 1% after the warehouse retailer reported net sales increased close to 10% in last month, boosted by e-commerce sales growth of nearly 18%. Bank of America also reiterated its “Buy” rating on the wholesaler’s stock.

  • Stocks mixed in afternoon trading

    Investors tried to find solid footing during afternoon trading on Friday after the release of the December jobs report. The major indexes travelled in both directions earlier in the day before settling in mixed territory.

    Near 12:30 p.m. ET the Dow Jones Industrial Average (^DJI) was down 0.2%, or about 75 points. The benchmark S&P 500 (^GSPC) climbed over the flatline while the tech-heavy Nasdaq Composite (^IXIC) advanced 0.1%.

    “The December employment report continued to show a gradual cooling in the labor market that is more consistent with a soft landing than a recession,” said Bank of America global research analysts in a note on Friday.

  • OpenAI aims for more licensing deals with publishers

    The maker of the popular AI chatbot ChatGPT is in talks with dozens of publishers to license their articles, Bloomberg reported Thursday. The agreements would help the startup train its AI models while compensating publishers for the content they produce.

    The effort to expand licensing deals comes as the New York Times filed a lawsuit against Microsoft (MSFT) and OpenAI over allegations of copyright infringement. The news outlet claims the AI companies engaged in wide-scale copying, hijacking the Times’ journalism to train its AI chatbots. The lawsuit is the latest in a broader dispute over how courts should view the legality of training large language models using published works found on the web without permission or compensation.

    While some publishers have already inked deals with OpenAI and other AI companies, the Times is among a class of creative outlets that have openly challenged how tech companies have gone about training their AI tools.

    “We are in the middle of many negotiations and discussions with many publishers. They are active. They are very positive. They’re progressing well,” Tom Rubin, OpenAI’s chief of intellectual property and content, told Bloomberg. “You’ve seen deals announced, and there will be more in the future.”

    However these deals play out, advocates for individual creators have raised concerns that professionals on the smaller end of media production will be shut out of potential licensing agreements. And without intervention from Congress or the courts, work-for-hire artists have little recourse to challenge AI companies even when their work is ingested by large language models, said Rick Allen, the co-founder of Nautilus Productions, a boutique stock footage company and production house.

    “It is telling that these negotiations by OpenAI, who jealously guards its own IP, recognize that other people’s content has value,” he said.

  • 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 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.

Click here for in-depth analysis of the latest stock market news and events moving stock prices.

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