U.S. Stocks Struggled, Treasury Yields Declined after Nonfarm Payrolls Accelerated

Barry Adams
08 Dec, 2023
New York City

Stocks turned lower, and Treasury yields perked up after the release of the nonfarm employment report.

Market indexes declined after job gains accelerated in November, the unemployment rate slightly declined, and wage increases were in line with expectations.

Market indexes have been rallying for weeks after the Federal Reserve held rates two times in a row, and subsequent inflation reports have confirmed a cooling trend.

Investors have remained focused on labor markets, and a series of reports covering job openings, weekly jobless claims, and private sector employment have confirmed a cooling but resilient market.

For the week, the Nasdaq is likely to close higher and extend weekly gains for the sixth consecutive week, and the S&P is likely to close down after rallying for five weeks in a row.

 

Nonfarm Payroll Increase Accelerated in November

Nonfarm payrolls increased 199,000 in November, following the 150,000 job gains in October, the U.S. Bureau of Labor Statistics reported Friday.

September job gains were downwardly revised by 35,000 to 262,000, and October job gains were unrevised.

Average hourly earnings, an indicator of wage inflation, rose 12 cents, or 0.4%, in the month and advanced 4% over the last 12 months.

The unemployment rate declined to 3.7%, and the number of unemployed people changed little to 6.3 million.

In November, the number of long-term unemployed, those jobless for 27 weeks or more, edged down to 1.2 million, accounting for 18.3% of all unemployed persons.

 

Carrier Global and Honeywell in a $5 billion deal

Carrier Global jumped 5.9% to $56.10 after the company agreed to sell its Global Access Solution unit for $4.95 billion in cash to Honeywell.

The purchase price is 13 times operating earnings, including tax benefits and run-rate cost synergies.

"Honeywell's strong track record delivering building automation products and services makes this a natural fit that will create a leading security platform with forecasted annual revenue in excess of $1 billion," said Vimal Kapur, Chief Executive Officer, Honeywell.

 

U.S. Indexes and Yields

The S&P 500 index gained 0.7% to 4,581.86, and the Nasdaq Composite increased 1.3% to 14,322.25.

The yield on 2-year Treasury notes increased to 4.70%, 10-year Treasury notes inched higher to 4.23%, and 30-year Treasury bonds increased to 4.32%.

Crude oil decreased $1.50 to $70.84 a barrel, and natural gas prices rose 1 cent to $2.59 a thermal unit.

Gold increased $0.4 to $2,028.34 an ounce on shifting investors' expectations that the Federal Reserve is more likely to cut rates sooner than expected in 2024.

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 103.77.

 

U.S. Stock Movers

Broadcom decreased 0.3% to $922.0 after the chipmaker reported better-than-expected quarterly results.

Revenue in the fiscal fourth quarter increased to $9.3 billion from $8.93 billion, net income advanced to $3.5 billion from $3.3 billion, and diluted earnings per share rose to $8.25 from $7.83 a year ago.

Semiconductor solution revenue increased 3% to $7.33 billion, and infrastructure revenue rose 7% to $1.97 billion.

The advanced chipmaker guided current fiscal year revenue of $50 billion.

Lulu Lemon Athletica decreased 2% to $454.67 after the specialty apparel retailer reported quarterly results and issued a weaker-than-expected holiday sales outlook.

RH dropped 8.5% to $257.51 after the furniture retailer reported weaker-than-expected revenue and posted an unexpected loss in its latest quarter.

Docusign declined 0.9% to $47.0 after the online service provider reported higher-than-expected quarterly earnings but offered a muted outlook.

Cooper Companies fell 1.4% to $340.0 despite the eyecare company reporting organic revenue growth and higher earnings in its latest quarter.

Vali Resorts declined 0.8% to $215.25 after the ski resort operator reported weaker-than-expected quarterly sales and earnings.