S&P 500 and Nasdaq Turn Higher After Job Gains Accelerated In December

Barry Adams
05 Jan, 2024
New York City

Stocks on Wall Street were volatile after investors reviewed the latest update on the job market.

The U.S. economy added more-than-expected jobs in December, quashing all hopes of a rate cut at the end of the policy meeting in March.

The faster-than-expected expansion lifted the yield on 10-year Treasury notes above 4% after investors dialed back on the prospects of rate cuts in March.

The S&P 500 index and the Nasdaq Composite have been rallying for the last nine weeks in a row, supported by moderate economic growth, weakening inflation, and a resilient labor market.

The latest update on the job market was the third report this week, confirming healthy labor market conditions.

For the week, two widely followed market indexes are expected to close down, halting the rally in the last two months. 

 

U.S. Payrolls Expanded at Faster Pace In December 

Nonfarm payrolls expanded by 216,000 in December, the U.S. Bureau of Labor Statistics reported Friday.

Economists polled by Ticker.com estimated payroll expansion by 160,000 after the economy added a downwardly revised 173,000 jobs in November.

However, the jobless rate was unchanged at 3.7%.

For the year 2023, the U.S. economy added 2.7 million jobs, the smallest increase since 2019 excluding pandemic-impacted 2020, an average monthly increase of 225,000.

Governments at all levels expanded jobs by 52,000, followed by gains in leisure and hospitality of 40,000, healthcare by 38,000, social assistance by 21,000, and construction by 17,000.

Employment in the leisure and hospitality sectors rose by 39,000 a month, following a monthly increase of 88,000 in 2022, but is still lagging the pre-pandemic peak in February 2020 by 163,000.

Employment in transportation and warehousing declined by 23,000 in December, and employment in the sector has declined by 100,000 after peaking in November 2022.

In December, average hourly earnings for all employees on private nonfarm payrolls increased by 0.4%, or 15 cents, to $34.27 and gained 4.1% over the last twelve months.

The change in total nonfarm payroll employment for October was revised down by 45,000 to 105,000, and in November it was revised lower by 26,000 to 173,000.

 

U.S. Indexes and Yields

The S&P 500 index increased 0.5% to 4,715.11, and the Nasdaq Composite increased 0.7% to 14,605.61.

The yield on 2-year Treasury notes increased to 4.43%, 10-year Treasury notes inched higher to 4.04%, and 30-year Treasury bonds rose to 4.19%.

WTI crude oil increased $1.05 to $73.25 a barrel, and natural gas prices decreased 9 cents to $2.72 a thermal unit.

Gold increased $1.91 to $2,045.10 an ounce, and the yellow metal price traded volatile for the fourth 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 102.47.

 

U.S. Stock Movers

Costco Wholesale Corporation rose 1.5% to $658.51 after the company reported a surge in sales in December, when the calendar shift added one extra shopping day in the month.

December sales rose 9.9% to $26.15 billion, and total and comparable sales were positively impacted by 3 percentage points for the additional shopping day in the month.