U.S. Stocks Struggled after Job Openings Report and Ahead of Nonfarm Payrolls Update

Barry Adams
05 Dec, 2023
New York City

Benchmark indexes lacked direction, and investors reviewed the latest job openings report and reassessed the economic outlook and the appropriate level of interest rates in early 2024.

Investors stayed on the sidelines ahead of the widely anticipated rate-pause decision next week, but the ongoing debate raged on Wall Street centered on the direction of interest rates.

Investors also reviewed the latest job openings report, indicating a cooling labor market, but new hires and separations were little changed in October.

Market participants are looking ahead to the nonfarm payrolls report on Friday, and five economists surveyed by Ticker.com are anticipating payrolls to expand by about 175,000 after growing by 150,000 in October.

Policymakers are closely watching the job market, and the latest job openings report confirmed the cooling trend over the last several months, but the overall job market is healthy.

One group of investors is supporting the view that interest rates are near peak rates and the Federal Reserve is more likely to cut rates as early as the second quarter of 2024.

The other group of investors is looking for the central bank to hold higher rates for longer, but many are worried that despite the eleven rate hikes between March 2022 and June 2023, prices are still rising faster than the 2% target rate set by the Federal Reserve.

Federal Reserve Chairman Jerome Powell stressed last Friday that talks of rate cuts are "premature" and inflation has a long way to go.

The Federal Reserve is engaged in a delicate balancing act of keeping economic growth intact while lowering inflation to 2% with a minimal impact on the labor market.

Overall inflation declined from a high of 9% in late 2022 to below 3% in recent months, largely because of the decline in energy prices and not because of multiple rate hikes by the central bank.

 

October Job Openings Dropped to 30-month Low 

Job openings declined sharply in October after employers across the nation in several industries curtailed announcements for new hires.

The number of job openings declined by 617,000 to 8.7 million, the U.S. Bureau of Labor Statistics reported Tuesday.

Over the month, job openings decreased in health care and social assistance by 236,000.finance and insurance by 168,000, and real estate and rental and leasing by 49,000.

But job openings increased in information by 39,000.

The widespread decline in job vacancies lowered the ratio of openings to available workers to 1.3 to 1 from around 2 to 1 earlier in the year.

 

U.S. Indexes and Yields

The S&P 500 index declined 0.2% to 4,565.03, and the Nasdaq Composite decreased 0.3% to 14,240.12.

The yield on 2-year Treasury notes increased to 4.63%, 10-year Treasury notes inched lower to 4.23%, and 30-year Treasury bonds decreased to 4.39%.

Crude oil decreased $0.04 to $72.98 a barrel, and natural gas prices rose 2 cents to $2.71 a thermal unit.

Gold decreased $4.15 to $2,025.87 an ounce on the expectation of a decline in interest rates as early as in the second quarter of 2024 and a weakening of the U.S. dollar.

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 103.79.

 

U.S. Stock Movers

Gitlab soared 14.2% to $60.44 after the software developer reported better-than-expected quarterly results and the company reported adjusted operating profit for the first time.

Lands End rose 1.5% after dropping as much as 9% to $6.75 after the apparel retailer reported weaker-than-expected quarterly results.

J.M. Smucker advanced 2.6% to $115.34, and the stock lacked direction after the food maker lowered its annual expectations after revenue plunged 12% from a year ago.

The company tightened the upper end of its comparable sales estimate and lowered its view of free cash flow and adjusted earnings per share.

 

European Market Indexes Traded at 4-month Highs 

European markets inched to a four-month high, and investors debated the rate path and the economic health of the eurozone.

Benchmark indexes in Frankfurt and Paris advanced to a four-month high amid mixed worries about the European Central Bank's next move, energy price-driven inflation, and consumer spending.

On Monday. Germany reported a larger-than-expected trade surplus, and today France reported industrial production declining for the third month in a row.

 

French Industrial Production Eased In October 

France's industrial production fell 0.3% in October from the previous month's upwardly revised 0.6% decline in September, the INSEE, the statistical office of France, reported Tuesday.

The weakness in mining, energy, and construction sector activities offset the slight rebound in manufacturing activities.

A year ago, industrial production rose 1.9% in October after falling 0.3% in September.

In other economic news, service sector activities in Spain and Italy shrank in October, two separate reports from S&P Global showed Tuesday.

The HCOB Italy Service PMI decreased to 49.5 in November, a decline for the fourth month in a row, but rose from a one-year low of 47.7 in October.

The HCOB Spain Service PMI eased to a three-month low of 49.8 in November from 50.0 in October.

 

Europe Indexes and Yields

The DAX index increased 0.8% to 16,533.11, the CAC-40 index rose 0.7% to 7,386.99, and the FTSE 100 index decreased 0.3% to 7,489.84.

The yield on 10-year German bonds decreased to 2.30%; French bonds traded lower to 2.86%; the UK gilts declined to 4.14%; and Italian bonds inched lower to 4.04%.

The euro traded lower to $1.083, the British pound inched lower to $1.263, and the U.S. dollar eased to 87.39 Swiss cents.

Brent crude increased $0.25 to $77.72 a barrel, and the Dutch TTF natural gas decreased by €1.98 to €38.13 per MWh.

 

Europe Stock Movers

Nokia declined 8.8% to €2.75 after AT&T said it plans to use telecom technology developed by Ericsson, which relies on cloud computing and non-proprietary off-shelf equipment developed by other companies.

Ericsson increased 4.9% to kr56.97.

AT&T said its telecom network equipment spending could reach as much as $14 billion over the next five years.