Wall Street Attempt to Rebound, Middle East War Fears Lift Crude Oil Prices

Barry Adams
04 Jan, 2024
New York City

Stocks struggled to advance in Thursday's trading, and Treasury yields edged slightly higher as investors debated the rate path.

The S&P 500 index and the Nasdaq Composite lacked direction in early trading, and investors debated interest rate paths, economic health, and labor market conditions.

Investors curbed their enthusiasm for rate cuts after the Fed's minutes suggested that policymakers are not in any hurry to lower rates until clear evidence of a sustained decline in inflation emerges.

While policymakers appear to agree that interest rates are near their peak levels in the current tightening cycle, rates could also go higher if the economic data suggest the need.

Investors' enthusiasm about a possible rate cut powered a nine-week rally in the S&P500 index and the Nasdaq Composite, but in the new year, investors are recalibrating the rate path outlook.

 

Private Sector Expands In December, ADP Report  

The private sector added payrolls at a faster-than-expected pace in December, highlighting the resilient U.S. labor market.

Private payrolls in the U.S. increased 164,000 in December, higher than a downwardly revised 101,000 in November, ADP reported Thursday.

The leisure and hospitality sector led the increase with an addition of 59,000, followed by increases in the construction sector by 24,000 and financial services by 18,000.

The closely watched nonfarm payroll data from the U.S. Labor Department is scheduled to be released on Friday, and economists are looking for the economy to add at least 160,000, according to a survey conducted by Ticker.com, following the increase of 199,000 in November.

 

Initial Weekly Jobless Claims Declined 

The latest weekly jobless claims report showed a decline in layoffs, but labor market conditions remain tight.

Initial jobless claims declined from 18,000 to 202,000 for the week ended December 30, the U.S. Labor Department reported Thursday.

The four-week moving average, which smooths out week-to-week volatility, declined by 4,750 to 207,750.

Continuing claims for the week ending in the previous week eased by 31,000 to 1.855 million.

 

U.S. Indexes and Yields

The S&P 500 index decreased 0.01% to 4,746.15, and the Nasdaq Composite dropped 0.4% to 14,473.12.

The yield on 2-year Treasury notes increased to 4.35%, 10-year Treasury notes inched higher to 3.95%, and 30-year Treasury bonds eased to 4.10%.

WTI crude oil increased $0.85 to $73.55 a barrel, and natural gas prices increased 11 cents to $2.78 a thermal unit.

Gold decreased $5.07 to $2,045.76 an ounce, and the yellow metal price traded down for the second day after investors dialed back rate-cut optimism.

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 102.32.

 

U.S. Stock Movers

Walgreens Boots Alliance increased 0.1% to $25.60 after the pharmacy operator reported fiscal first-quarter earnings and revenues that were ahead of market expectations.

Cal-Maine Foods dropped 5.2% to $52.05 after the egg producer reported fiscal second-quarter results.

Revenue plunged in the quarter after the average selling price per dozen fell to $1.70 from $2.70 and the number of dozne eggs sold increased to 288.2 million from 284.0 million, respectively, in the previous year.

Revenue in the quarter dropped to $523.2 million from $801.7 million, net income declined to $16.6 million from $198.3 million, and diluted earnings per share dropped to 35 cents from $4.07 a year ago.

Apple declined 1.2% to $182.0 after an analyst at Piper Sandler lowered his views on the tech giant.

Meta Platforms increased 0.1% to $344.80, and chief executive Mark Zuckerberg sold more than $400 million in the company's share at the end of last year as a part of a trading plan that was previously announced.

Ford Motor Company decreased 0.01% to $11.70, and the company announced a price increase for some of its electric F-150 Lightning pickup trucks.