Resilient Economy and Tight Labor Market Worry Investors

Barry Adams
06 Dec, 2022
New York City

Stocks on Wall Street struggled after rate hike worries resurfaced following fresh economic data suggesting that the U.S. economy and labor markets are stronger than anticipated. 

Despite multiple rate hikes this year, the economy is still showing no signs of cooling and labor market conditions remain tight. 

The debate rages on about the size of the rate increase at the next Fed's policy meeting, but the rate increases are likely to continue for several more meetings in 2023. 

The Federal Reserve has reiterated its goal of bringing down the inflation to 2.0%, but inflation has hovered above 7.5% and the PCE Price index above 5%, the Fed's preferred measure of inflation. 

The S&P 500 index dropped 1.7% to 3,931.46 and the Nasdaq Composite index declined 2.2% to 3,931.46. 

Crude oil declined $2.23 to $74.63 a barrel and natural gas fell 15 cents to $5.42 a thermal unit.

The yield on 10-year Treasury notes fell to 4.37%, 10-yearTreasury notes dropped to 3.54% and 30-year Treasury bonds dropped to 3.56%. 

 

International Trade Deficit Expands 

The U.S. international trade deficit in goods and services was $78.2 billion in October, an increase of 19.9% from a year ago and 5.4% from September, BEA reported Tuesday.

Exports declined 0.7%, second monthly fall in a row, to $256.6 billion and imports increased 0.6%, the largest since June, to $334.6 billion on higher imports of automobiles, nuclear materials, travel and pharmaceutical preparations. 

 

Stock Movers

BuzzFeed Inc declined 3.5% to $1.10 after the company announced its plan to eliminate 180 positions or cut  12% of its staff by the end of the first quarter.   

The company blamed its recent woes on challenging macroeconomic conditions, ongoing shift to short-form and vertical video and recent acquisition of Complex Networks.  

Textron Inc rose 4.9% to $73.40 after the company won a contract to provide advanced helicopters to the U.S. Army. The contract could be worth as much as $70 billion. 

Signet Jewelers Ltd surged 18.7% to $68.61 after the retailer posted stronger-than-anticipated quarterly results. 

Sales in the fiscal third quarter ending in October rose 2.9% to $1.58 billion from $1.53 billion a year ago. 

Net income in the fiscal third quarter dropped to $28.8 million from $83.9 million and diluted earnings per share fell to 60 cents from $1.45 a year ago. 

Total sales in North America increased 5.1% to $1.5 billion and same stores sales declined 7.6% from a year ago reflecting higher average transaction value but fewer number of transactions. 

The retailer also revised higher its non-GAAP operating margin to increase in double-digit, inclusive of the recent acquisition Blue Nile. 

NRG Energy dropped 17.1% to $33.89 after the company said it plans to acquire Vivint Smart Home for $12 a share or $2.8 billion and assumption of $2.4 billion in debt net of cash. 

 Vivint soared 32.5% to $11.90. 

NRG also said it plans to complete its remaining $360 million of its stock purchase under the $1.0 billion plan and use the excess free cash flow in 2023 to fund the acquisition and the related debt.