Employment-related data once again hit investors' expectations of a sharp rate cut by the Federal Reserve in 2024, but service-related data partially hedged the impact of the blockbuster jobs report, and the stock and bond markets alternated intraday.
The U.S. non-farm payrolls report for December released before the U.S. stock market on Friday showed that the number of new non-farm payrolls in December far exceeded Wall Street expectations, an increase of 45,000 more than expected, and the unemployment rate was unchanged from 3.7% in November, lower than the expected 3.9%; wages increased more than expected, and the year-on-year growth rate of average hourly earnings accelerated to 4.1% from 4% in November, not slowing to 3.9% as the market expected.
The blockbuster jobs report reflected that the U.S. labor market remained solid, adding to concerns that the Fed's rate cut expectations may be too aggressive. Rate cut expectations have cooled further, with swap contracts trading at prices showing investors pricing in a slightly less than 50% probability of a 25 basis point rate cut in March, pricing in a rate cut of about 13 basis points in March, down from about 16 basis points expected at Thursday's close.
After the jobs report was released, U.S. Treasury prices flashed lower, and yields rose intraday. The yield on the benchmark 10-year Treasury note rose to 4.10% intraday for the first time in three weeks, up about 10 basis points on the day, and the yield on the interest-sensitive two-year Treasury note flattened out the intraday decline. However, the rally in Treasury yields has been a bumpy intraday.
The U.S. ISM non-manufacturing index released after the opening of the U.S. stock market fell more than expected, hitting the largest month-on-month decline in nine months, reflecting the larger-than-expected slowdown in the expansion of enterprises in the service sector, which is the main contributor to GDP, and the employment sub-index in December also hit a new low in more than three years, releasing a cooling signal for the labor market. Treasury prices jumped after the release of the data, yields accelerated to give up gains after the non-farm payrolls report, and the 10-year yield broke below 4.0% in early U.S. trading, and the two-year yield returned to the downward trend, and recovered again at midday.
After the ISM data, the market's expectation of a rate cut by the Fed in March rebounded, and finally almost unchanged from Thursday's level, and overall, the expected probability of the week remained downward.
After the release of the ISM services data, the major U.S. stock indexes with small fluctuations rose intraday and finally closed up overall, and the decline of the whole week and U.S. Treasury bonds was a foregone conclusion. The Federal Reserve meeting minutes and "small non-farm payrolls" released this week have either suppressed or hit the market's expectations of interest rate cuts, which has stalled a major momentum to support the rise of US stocks in 2023. The first week of 2024 for major stock indexes is set to get off to a black start, ending the longest streak since 2004. The blue-chip Apple, which has been downgraded by institutions and reported that antitrust lawsuits are coming, has been tumbling for a week, significantly dragging down the broader market, and its market value has evaporated by more than $160 billion this week.
In the first week of 2024, when the market was closed for only four trading days due to the New Year's Day holiday, the combined market value of the global stock and bond markets evaporated by more than $3 trillion, the worst start to the new year in more than two decades.
In line with Friday's Treasury yields, the dollar index also accelerated after the non-farm payrolls report, rising above 103.00 for the first time in three weeks, quickly turning lower after the ISM data and updating its daily low. However, the U.S. dollar index has since turned slightly higher and has not changed its weekly rally, rising for the first time in a month as expectations of interest rate cuts have been hit. When the dollar turned lower on Friday, a number of non-U.S. currencies turned up intraday, the euro and the yen bid farewell to the three-week lows set in the session, and the offshore yuan fell below the 7.18 mark for the first time in three weeks in the Asian market, and then rose nearly 400 points from this low.
Among commodities, gold fluctuated after the release of U.S. economic data, after the non-farm payrolls report, gold refreshed daily lows, and then turned higher, and ISM data refreshed daily highs, and then gave up gains, and finally failed to maintain the momentum of Thursday's rally. Like a variety of base metals such as copper, gold futures also fell, and gold futures fell for the first time in a month.
The international crude oil did not repeat Thursday's intraday turn, stimulated by tensions in the Middle East, intraday rose more than 2%, with Friday's rebound to maintain the weekly gains, getting rid of the danger of falling for two consecutive weeks. According to CCTV, Israeli Defense Minister Gallant said that the Israeli army has prepared a comprehensive military plan to deal with Israel's northern front, and will expand the scope of military operations in the Israeli-Lebanese border area according to the situation. In addition, shipping giant Maersk said that in light of the recent attacks on its ships in the Red Sea, all of its ships transiting the Red Sea will make a detour to the Cape of Good Hope for the foreseeable future. U.S. natural gas has performed better, and weather forecasts point to colder weather in the U.S. next week, boosting gas prices to continue to refresh their highs since late November, with double-digit gains this week.
The Nasdaq stopped falling for five consecutive years, the three major U.S. stock indexes ended their nine-week winning streak, Nvidia and other chip stocks outperformed the market, and Apple fell nearly 6% throughout the week
The three major U.S. stock indexes rose in early trading. The Dow Jones Industrial Average turned lower in the short term at the beginning of the session, rising more than 180 points in early trading, the S&P 500 index opened slightly higher rose nearly 0.7% in early trading, and the Nasdaq Composite Index opened slightly lower rose about 0.8% at the end of morning trading, and both turned lower more than once at midday, with the Dow Jones falling nearly 120 points, or about 0.3%. In the end, the three major indexes locked in the rally at the end of the session and barely closed up collectively, with the Nasdaq and the S&P halting their five-day and four-day losing streaks, respectively.
The Nasdaq closed up 0.09% at 14,524.07, approaching its lowest level since December 11, which was refreshed on Thursday. The S&P, which refreshed its lowest level since Dec. 12 on Thursday, closed up 0.18% at 4,697.24. The Dow closed up 25.77 points, or 0.07%, at 37,466.11, up less than 0.1% for the second straight day and still close to Wednesday's lowest closing since Dec. 22.
The Russell 2000, a small-cap index dominated by value stocks, closed down 0.34%, falling for six consecutive days, and continued to refresh its closing low since December 13. The tech-heavy Nasdaq 100 closed up 0.15%, rebounding after falling to its lowest level since Dec. 11. The Nasdaq Technology Market Cap Weighted Index (NDXTMC), which measures the performance of technology constituents in the Nasdaq 100 index, closed up 0.33%, rebounding after falling four straight to its lowest level since Dec. 11, and fell 3.8% this week, halting a nine-week winning streak.
Major stock indexes fell across the board this week, and the S&P's record for the longest weekly winning streak since 2004 set last week came to an end. The S&P fell 1.52%, the Dow fell 0.59%, the Nasdaq fell 3.25%, and the Nasdaq 100 fell 3.09%, all ending a nine-week winning streak, and the Russell 2000 fell 3.75%, falling for two weeks in a row after six consecutive gains.
Among the major sectors of the S&P 500, only three did not close up on Friday, consumer staples fell more than 0.2%, real estate fell nearly 0.2%, medical fell slightly, financials rose more than 0.5% to lead the gains, and energy rose less than 0.1% at the bottom. A total of six sectors fell this week, Apple's IT fell more than 4%, Tesla's consumer discretionary fell more than 3%, industrial fell more than 2%, real estate fell nearly 2%, communication services and materials fell more than 1%, while medical rose more than 2%, utilities and energy rose more than 1%, and consumer discretionary rose slightly.
Leading technology stocks had risen in early trading, but failed to close up collectively. Among them, Tesla fell more than 1% at the beginning of the session, and turned up in early and midday, closing down nearly 0.2%, falling for six consecutive days, refreshing the closing low since December 12 for two days, and falling 4.4% this week, falling for three consecutive weeks.
Among the six major technology stocks of FAANMG, the media said that after the U.S. Department of Justice filed an antitrust lawsuit to crack down on the iPhone monopoly strategy in the first half of the year, Apple turned down at noon, falling 0.8% at the lowest day and closing down 0.4%, falling for five consecutive days, refreshing the low closing level since November 6; Microsoft rose more than 1% in early trading, closed down slightly, and refreshed the low since December 14 in two days; Alphabet, the parent company of Google, closed down nearly 0.5%, falling for two consecutive days to the lowest level since December 18; Netflix closed down more than 0.1% , failed to continue to get out of Tuesday's three-day losing streak since December 12, while Facebook's parent company Meta closed up 1.4%, after falling for three consecutive days to the lowest since December 15, and Amazon, which fell for four consecutive days to close low since December 6, closed up nearly 0.5%.
In the week when two institutions downgraded their ratings in quick succession, Apple fell 5.9%, the worst performer among the above-mentioned technology stocks. Amazon fell more than 4%, Microsoft, Amazon, and Netflix all fell more than 2%, and Meta fell nearly 0.6%.
Chip stocks rebounded after three consecutive days of decline, outperforming the market, but after the previous three days of decline, they are still generally falling this week. The Philadelphia Semiconductor Index and the Semiconductor Industry ETF SOXX rose more than 1% in early trading, closing up more than 0.6% and nearly 0.6%, respectively, bidding farewell to Thursday's refreshed closing low since December 8, falling 5.8% and nearly 6% respectively this week. Among the individual stocks, the EU antitrust chief will visit the United States next week to meet with the CEOs of technology giants such as Apple and Nvidia, Nvidia rose more than 3% in early trading, closed up more than 2%, fell nearly 0.9% this week, AMD rose 1.9% at the close, Micron Technology rose 0.9%, Qualcomm rose 0.4%, and Intel rose slightly.
Including Apple, Microsoft, Alphabet, Meta, Amazon, Nvidia, and Tesla, the combined market value of the seven major technology stocks has evaporated by more than $400 billion this week, and the stock price has generally given up almost all of its gains in December.
Popular Chinese concept stocks generally fell against the market. The Nasdaq Golden Dragon China Index (HXC) closed down 1.8%, falling for two consecutive days to its lowest level since December 22, and down 4.2% for the week. Chinese ETFs KWEB and CQQQ fell less than 1% after narrowing their losses in early trading. The three new car-making forces fell together, and by the close, Xpeng Motors fell more than 5%, and Li Auto and Weilai Automobile fell more than 2%. Among other stocks, at the close, NetEase and Station B fell nearly 5%, down more than 3%, Alibaba fell more than 2%, JD.com and Tencent fell more than 1%, Pinduoduo fell 0.8%, and Baidu fell more than 0.1%.
Among the more volatile stocks, healthcare stock Agilon Health (AGL) closed down 28.4% after it lowered its 2023 revenue guidance, announced the resignation of its CEO, and downgraded it to neutral by JPMorgan Chase, a real estate investment trust Medical Properties, after revealing it was working with its largest tenant, Steward Health Care System, to recover $50 million in unpaid rent Trust (MPW) closed down 29% and closed up 9.6% after social fitness company Peloton (PTON) rose more than 10% intraday to close up 9.6% after Stifel upgraded its rating from hold to buy on its pet health channel and multiple expansion opportunities.
In terms of European stocks, some economic data are not conducive to interest rate cut expectations, and the eurozone CPI in December accelerated by 2.9% year-on-year more than expected, supporting the European Central Bank to keep interest rates high for longer, and the pan-European stock index fell back on Thursday after just stopping two consecutive losses. The Euro Stoxx 600 index has not been able to continue to break off the lows it has had since December 13, which it has refreshed on Wednesday. Stock indexes in major European countries mostly fell, with German, French, British and Spanish stocks that rebounded on Thursday retreating, while Italian stock indexes rose for the second time in a row.
Among the sectors, retail sales led the decline, down nearly 1.1%, chemicals fell nearly 1%, while banks and media closed up about 0.5% and 0.2% respectively against the market. Among individual stocks, French liquor giant Cointreau Pernod Ricard closed down about 12% and 3.6%, respectively, after China's Ministry of Commerce launched an anti-dumping investigation on import-related brandy originating in the European Union, leading the losses of the components of the STOXX 600 and the blue-chip index STOXX 50, respectively. According to CCTV, the relevant person in charge of China's Ministry of Commerce said that after reviewing the application of relevant domestic industries, it is believed that the application meets the conditions for filing an anti-dumping investigation. Shipping giant Maersk, which rose for four consecutive days, closed down about 1% and is still up about 15.3% this week.
Partly due to Wednesday's plunge of nearly 0.9% for its biggest drop since Nov. 10, the STOXX 600 index fell nearly 0.6% this week, its first weekly decline in eight weeks. Most of the stock indexes of various countries have fallen, British stocks that have risen for five consecutive weeks and German stocks that rebounded last week have fallen, French stocks have fallen for three consecutive weeks, and Italian stocks that have fallen for three consecutive weeks and Western stocks that have stopped rising for eight consecutive weeks last week have rebounded. This week, retail fell about 4.9%, the worst performance, technology fell more than 4%, while the banking sector rose more than 2%, outperforming, and medical care, which ended its five-day winning streak on Friday, also rose more than 2%, up about 2.6%, leading the way for two consecutive weeks.
The two-year Treasury yield rose nearly 30 basis points in a week After the ISM data, the US Treasury yield turned lower and finally rose more than 10 basis points for the week
European government bond prices generally continued to fall in unison, with European bond yields following US non-farm payrolls to refresh daily highs and giving up at least half of their gains after the release of US ISM data. By the end of the bond market, the UK 10-year benchmark government bond yield closed at 3.78%, up about 6 basis points on the day, the US non-farm payrolls report rose above 3.85%, a three-week high, up about 13 basis points on the day, the 2-year UK bond yield closed at 4.21%, up about 5 basis points on the day, the US jobs report had risen 4.30%, continuing to refresh the high since December 20, and the benchmark 10-year German bund yield closed at 2.15% , rose about 3 basis points during the day, the U.S. jobs report was close to 2.22%, continuing to refresh a three-week high, the 2-year German bond yield closed at 2.56%, up about 5 basis points in the day, and the U.S. jobs report rose above 2.63%, also refreshed a three-week high.
European Treasury yields climbed sharply by at least 10 basis points this week, reflecting an unexpected acceleration in CPI growth that hit the market's expectations of central banks cutting interest rates this year. The yield on 10-year British bonds rose by about 26 basis points, the yield on 10-year German bonds rose by about 13 basis points, and for the second week in a row after falling for four consecutive weeks, short-term bond yields stopped falling for many consecutive weeks, with the yield on 2-year British bonds rising by about 29 basis points, and the yield on German bonds rising by about 18 basis points over the same period.
After the release of the U.S. non-farm payrolls report, the U.S. 10-year benchmark Treasury bond yield quickly short-term test of 4.10%, the first intraday rise of 4.10% in three weeks, up about 10 basis points in the day, up more than 10 basis points from the daily low, after the release of ISM data in early trading, the U.S. stock market fell back below 4.0%, once below 3.96% to refresh the daily low, down nearly 5 basis points in the day, continued to rise at noon, to about 4.05% at the end of the bond market, up about 5 basis points in the day, up for two consecutive days, up about 17 basis points this week.
After the release of the non-farm payrolls report, the yield on the 2-year Treasury note, which is more sensitive to the outlook for interest rates, quickly rose above 4.48%, and also refreshed a three-week high, rising about 10 basis points in a day, and after the release of the ISM data, it broke through 4.32% to refresh the daily low, fell about 7 basis points in the day, and was about 4.38% at the end of the bond market.
In terms of the increase in first-week yields, the 2-year Treasury note had the worst performance in the first week of the year since 2005.
The U.S. dollar index turned lower after hitting a three-week high and rose for the first time in a month
After the release of the U.S. non-farm payrolls report before the U.S. stock market, the ICE U.S. Dollar Index (DXY), which tracks a basket of six major currencies such as the U.S. dollar against the euro, expanded rapidly, once rising above 103.00 and touching 103.10, refreshing the intraday high since December 13, up nearly 0.7% in the day, and then falling back , after the continued rebound, more than once at midday slightly turned up.
By the close of the U.S. stock market on Friday, the U.S. dollar index was above 102.40, up less than 0.1% during the day, not continuing the four-day losing streak that ended on Thursday, and rose about 1.1% this week;
The rise in the U.S. dollar index this week was mainly due to the sharp rise on Tuesday, the first trading day of the year, when the market suspected that the central bank was too optimistic about the expectation of interest rate cuts, and hit the largest daily increase in nearly ten months since March 7.
Among the non-U.S. currencies, the yen turned up intraday, and finally fell for four consecutive days, the dollar against the yen in the U.S. stock market had approached 146.00, a three-week high, up more than 0.9% in the day, the U.S. jobs report continued to fall, the U.S. stock market was close to 143.80 in early trading to refresh the daily low, down nearly 0.6% in the day, and then rebounded, the U.S. stock closed up about 0.1%; the euro against the dollar fell below 1.0880 before the U.S. stock market, refreshed the three-week low, down 0.6% in the day , U.S. stocks had risen to 1.1000 in early trading, back to the intraday level on Monday, January 2, and then gave up gains, U.S. stocks closed slightly down the day; GBP/USD refreshed the daily low at 1.2610 on the lower side of the U.S. stock market pre-market, and U.S. stocks rose above 1.2770 in early trading, refreshing a one-week high, up more than 0.7% during the day, and U.S. stocks closed up about 0.3%.
The offshore yuan (CNH) fell to 7.18 to 7.1803 against the dollar in early Asian trading, refreshing the low level since December 13 for three consecutive days, and then turned up more than once, and the U.S. non-farm payrolls report quickly turned up and maintained the rally, and the U.S. stock market was close to recovering 7.14 in early trading. At 5:59 on January 6, Beijing time, the offshore yuan was 7.1627 yuan against the US dollar, up 125 points from the end of New York on Thursday, reversing a four-day losing streak, and still falling 369 points this week, erasing the gains of last week's rebound.
Bitcoin (BTC) fell below $43,000 to $42,800 in early Asian trading to refresh its daily low, down more than $2,000 or nearly 5% from its intraday high above $44,000 at the beginning of the Asian session, and then narrowed its decline, and European stocks weighed $44,000 intraday. In midday trading in the U.S. stock market, it was reported that the SEC did not submit a new feedback document request to institutions applying for bitcoin spot ETFs, saying that they should submit the final version of the documents as soon as this Friday, and the decline in the currency price narrowed again and regained $44,000 before the SEC voted to approve the ETF application next week.
At the close of the U.S. stock market, Bitcoin was below $43,800, down more than 1% in the last 24 hours, but up nearly 4% in the last seven days.
Crude oil rebounded to a more than one-week high, and U.S. natural gas continued to hit a five-week high, up 15% in a week
International crude oil futures maintained their gains throughout the day on Friday, and when the U.S. stock market refreshed its daily high in early trading, U.S. WTI crude oil rose above $74.20, up more than 2.8% on the day, and Brent crude oil was close to $79.30, up nearly 2.2% on the day.
As a result, WTI crude oil futures for February delivery closed up 2.24% at $73.81 a barrel, while Brent crude futures for March delivery closed up 1.51% at $78.76 a barrel, both updating their closing highs since Wednesday.
This week, U.S. oil rose by about 3%, and cloth oil rose by 2.23%. After retreating last week, it has risen for the third week in the last four weeks. In the 13 weeks since the outbreak of the Palestinian-Israeli conflict, this week is the fifth week of crude oil gains, and this week's rise in the US dollar is mainly due to tensions in the Middle East, and the closure of Libya's largest oil field is also helping.
U.S. gasoline and natural gas futures continue to be mixed. NYMEX February gasoline futures closed down 0.2% at $2.1055 per gallon, continuing to approach the lowest level since December 13 refreshed last Thursday, falling for two consecutive days, falling less than 0.1% this week, falling for three consecutive weeks, and NYMEX February natural gas futures closed up 2.55% at $2.8930/MMBtu, refreshing the high since November 27 for two consecutive days, rising for four consecutive days, and rising more than 15.07% this week, up for three consecutive weeks.
London copper fell for three consecutive weeks for six consecutive weeks, and gold fell first and then rose, and finally closed flat, ending a three-week winning streak
Base metals futures in London were mixed on Friday. London copper closed down for six consecutive trading days, hitting a new low in nearly three weeks. London aluminum fell for four consecutive days, hitting a two-week low. Lunxi fell twice in a row, hitting a new low in more than three weeks. London nickel, which has fallen for five consecutive days, rose nearly 2%, out of the low level since April 2021 refreshed on Thursday. Lun lead, which fell four times in a row, and London zinc, which fell three times in a row, also rebounded, breaking away from the three-week and two-week lows, respectively.
This week, the base metals almost fell together, leading the decline of London aluminum fell 4.6%, London zinc and London tin fell more than 3%, London nickel and London copper fell more than 1%, London aluminum and London zinc rose for three consecutive weeks and London nickel and London tin rebounded last week all fell, London copper fell for three consecutive weeks, and London lead rose slightly by nearly 0.4%, not falling for two consecutive weeks.
New York gold futures turned higher on Friday, and continued to rebound without danger. After the release of the U.S. non-farm payrolls report before the U.S. stock market, the decline in gold futures expanded rapidly, falling to a new daily low of $2030.8, down more than 0.9% during the day, and then rebounded, and the gains after the release of the U.S. ISM data further expanded, rising above $2071 to refresh the daily high, an intraday increase of slightly more than 1%, and then gave up the gains.
Finally, COMEX February gold futures, which rebounded on Thursday, closed slightly lower by $0.2 to close roughly flat at $2,049.8 an ounce, failing to continue to break off Wednesday's new closing low since December 18.
Gold fell 1.06% in the current cycle, ending a three-week winning streak, mainly due to the fact that it closed down 1.48% on Wednesday, the largest daily decline since December 8. In the 13 weeks since the outbreak of the Palestinian-Israeli conflict, gold futures have fallen for only two weeks, of which this week's decline is far less than that of the week ending December 8, which fell by more than 3%.
After the release of the U.S. jobs report, spot gold fell below $2024.80 to refresh the daily low, down more than 0.9% during the day, and after the release of ISM data in early trading, the U.S. stock market was close to $2063 to refresh the daily high, up more than 0.9% in the day, almost giving up all gains at midday, and the U.S. stock market closed above $2040, rising slightly in the last 24 hours.
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