Highlights
Equities fell Thursday as strong US employment figures renewed worries about US rate hikes ahead. The Dow Jones industrial average lost 1.0 percent, the S&P 500 fell 1.2 percent, and the NASDAQ dropped by 1.5 percent. Shorter maturity US Treasury yields rose while long yields retraced their early uptick to end lower on recession fears. Oil prices and the dollar rose.
Market interest rates and the dollar surged on the view that the Federal Reserve will be obliged to tighten even more than expected on signs of labor market strength. This followed news that ADP's measure of private payrolls exceeded forecasts in December while new unemployment claims dipped more than expected in the latest week. Kansas City Fed President Esther George's comment that rates will need to remain high into 2024 added to the selloff. US international trade figures showing both exports and imports fell more than expected in November played into the bearish narrative that the Fed is tightening into a nasty downturn.
Company news hurt too, in particular Amazon's announcement of huge layoffs, on top of other high-profile job cuts in tech-oriented businesses. Losses in megacaps kept the market under pressure through the day. More market-friendly comments from St. Louis Fed Jim Bullard, who spoke of disinflation in 2023, helped the market recover a bit in the afternoon.
Losses were broad-based. Among sectors, worst hit were consumer discretionary, health care, financials, utilities, materials, and real estate. Energy stocks held up relatively well as oil gained on data showing US oil inventories rose less than expected.
Market interest rates and the dollar surged on the view that the Federal Reserve will be obliged to tighten even more than expected on signs of labor market strength. This followed news that ADP's measure of private payrolls exceeded forecasts in December while new unemployment claims dipped more than expected in the latest week. Kansas City Fed President Esther George's comment that rates will need to remain high into 2024 added to the selloff. US international trade figures showing both exports and imports fell more than expected in November played into the bearish narrative that the Fed is tightening into a nasty downturn.
Company news hurt too, in particular Amazon's announcement of huge layoffs, on top of other high-profile job cuts in tech-oriented businesses. Losses in megacaps kept the market under pressure through the day. More market-friendly comments from St. Louis Fed Jim Bullard, who spoke of disinflation in 2023, helped the market recover a bit in the afternoon.
Losses were broad-based. Among sectors, worst hit were consumer discretionary, health care, financials, utilities, materials, and real estate. Energy stocks held up relatively well as oil gained on data showing US oil inventories rose less than expected.
Definition
Market Reflections track market reaction to the trading day's major events. Economic data, policymaker speeches, and company news are featured in this report as well as key indexes and financial instruments.
Description
Understanding why markets respond as they do is fundamental for an investor. Market Reflections help explain how the day's events, news, and data impact the outlook for the economy and for market prices.
