S&P 500 and Nasdaq Advanced 1%, World Markets Look Beyond Rate Jitters

Barry Adams
06 Mar, 2024
New York City

Stocks on Wall Street edged higher after two losing sessions in a row, and investors reviewed updates on the labor market. 

The S&P 500 index and the Nasdaq Composite advanced, and semiconductor and large-cap tech stocks led the gainers. 

Investors also reviewed Federal Reserve Chairman Jerome Powell's prepared comments to be delivered to lawmakers on Capitol Hill. 

Fed Chair Powell reiterated the central bank's stand to keep interest rates restrictive and not ease inflation too early. 

“The Committee does not expect that it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent,” Powell added in his comments. 

Despite the Fed's tough talk, the central bank has expanded the broad money supply by 45% during the three years of the COVID-19 pandemic between 2020 and 2022, driving up food, automobile, and home prices by more than 100%. 

 

U.S. Job Openings Held Steady 

The number of job openings decreased by 86,000 to 8.9 million in January from the previous month, the U.S. Bureau of Labor Statistics reported Wednesday in its monthly Job Openings and Labor Turnover Survey. 

The job openings measure is down from a series high of 12.2 million in March 2022. 

In January, job openings increased in nondurable goods manufacturing by 82,000 but decreased in private educational services by 41,000. 

Over the month, the number of hires and total separations were little changed, at 5.7 million and 5.3 million, respectively.

The number of job openings for December was revised down by 137,000 to 8.9 million, the number of hires was revised up by 166,000 to 5.8 million, and the number of total separations was revised up by 54,000 to 5.4 million.

In 2023, the annual average job opening level was 9.4 million, a decrease of 1.8 million from 2022. The annual average job opening rate was 5.7 percent in 2023, compared to 6.8 percent in 2022. 

 

U.S. Private Payrolls Expanded In February 

Private payrolls expanded in February by 140,000 after growing by an upwardly revised 111,000 in January, payroll processing company ADP reported Wednesday. 

In the month, leisure and hospitality led job increases across all industries with a gain of 41,000, followed by construction with 28,000, utilities with 27,000, and financial services with 17,000. 

 

U.S. Indexes and Yields

The S&P 500 index decreased 0.9% to 5,085.84, and the Nasdaq Composite decreased 1.5% to 15,963.81. 

The yield on 2-year Treasury notes decreased to 4.58%, 10-year Treasury notes inched down to 4.14%, and 30-year Treasury bonds edged down to 4.28%.

WTI crude oil decreased $1.01 to $79.13 a barrel, and natural gas prices decreased 1 cent to $1.97 a thermal unit.

Gold increased by $8.53 to $2,136.23 an ounce, and silver rose 11 cents to $23.79. 

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 103.88.

 

U.S. Stock Movers

Nordstrom plunged 9.2% to $18.87 after the department store chain reported better-than-expected results in the fiscal fourth quarter, but the company's 2024 guidance for the current year fell short of market expectations. 

CrowdStrike Holdings soared 22.5% to $364.59 after the cyber security company reported better-than-expected quarterly results. 

Box jumped 4.6% to $28.50 after the cloud storage company reported revenue in line with analysts' estimates. 

Foot Locker plunged 11.1% to $30.50 after the athletic footwear retailer reported a loss in its latest quarter and the company guided weaker-than-expected sales in the current year. 

Abercrombie & Fitch declined 2% to $137.01 despite the apparel retailer reporting better-than-expected sales in the holiday quarter and the company's positive outlook for the current year. 

Sales in the quarter ending on January 28 increased 21% to $1.45 billion from $1.2 billion, net income advanced to $158.4 million from $38.3 million, and diluted earnings per share rose to $2.97 from 75 cents a year ago. 

The retailer estimated sales in the current quarter to rise by a low double-digit percentage and increase between 4% and 6% in the fiscal year. 

 

European Markets Edged Higher Awaiting Rate Decisions and Growth Outlook

Stock market indexes in Europe edged higher, and investors reviewed the latest economic updates and awaited the release of the UK's general budget. 

Benchmark indexes in Frankfurt, Paris, and London inched higher ahead of the European Central Bank's rate decisions on Thursday.

 

Eurozone Retail Sales Barely Advanced in January 

Retail sales in the eurozone increased by 0.1% in January from the previous month, following a revised 0.6% contraction in December, Eurostat reported Wednesday. 

Retail sales adjusted for the calendar decreased 1.0% from a year ago, and fell for the sixteenth month in a row. 

Volume of food, drinks, and tobacco from a year ago declined by 0.6%, automotive fuel increased by 0.8%, and nonfood products declined by 1.4%. 

 

German Trade Surplus Expands to Record High In January 

German exports rose faster than imports, driving the trade surplus to a record high in January, indicating a strong demand for German goods. 

Exports rose 6.3% monthly and edged up 0.3% annually to €135.6 billion, and imports rose 3.6% monthly but dropped 8.3% annually to €108 billion. 

Most German exports were shipped to the U.S., followed by transactions with the People's Republic of China and the U.K. 

Exports to the U.S. decreased 1.7% monthly to 12.5 billion, to China increased 7.8% to 8.1 billion, and to the U.K. decreased 8.1% to 6.8 billion. 

Meanwhile, most imports arrived from China, followed by shipments from the U.S. and the U.K. 

Imports from China decreased 11.1% to €10.4 billion, from the U.S. fell 5.2% to €7.8 billion, and from the U.K. increased 18.4% to €3.1 billion. 

Calendar and seasonally adjusted goods exports to the European Union member states increased 8.9% to €75.8 billion, and imports rose 10.8% to €61.2 billion. 

The goods trade surplus in January widened to €27.5 billion from €23.3 billion in December and €16.9 billion a year ago. 

 

Europe Indexes and Yields

The DAX index increased by 0.05% to 17,708.60, the CAC-40 index rose by 0.3% to 7,955.77, and the FTSE 100 index inched higher by 0.3% to 7,671.70.

The yield on 10-year German bonds edged down to 2.35%; French bonds inched lower to 2.81%; the UK gilts edged lower to 4.05%; and Italian bonds inched lower to 3.72%.

The euro edged higher to $1.087, the British pound inched higher to $1.272, and the U.S. dollar weakened to 88.45 Swiss cents.

Brent crude increased $1.99 to $84.03 a barrel, and the Dutch TTF natural gas increased by €0.67 to €26.80 per MWh.

 

Europe Stock Movers

Legal & General Group declined 2.2% to 239.91 pence after the UK-based insurance company reported flat operating profit in 2023. 

DS Smith increased 0.5% to 321.90 pence after the paperboard and packaging company reported better-than-expected fiscal third quarter profit and the company estimated a positive outlook in the current quarter. 

Deutsche Post declined 5.8% to €39.27 after the parent company of DHL cautioned against flat annual earnings in the current fiscal year. 

Symrise advanced 4.9% to €100.90 after the German flavor and fragrance company reported a better-than-expected core annual profit in 2023. 

Tullow Oil fell 0.5% to 28.11 pence after the independent energy company reported a decline in pre-tax profit on lower crude oil prices and impairment charges. 

Total revenue in 2023 declined to $1.6 billion from $1.8 billion, net income from continuing activities swung to a loss of $110 million from a profit of $49 million, and basic earnings per share were 7.6 cents a loss compared to 3.4 cents a profit a year ago. 

Energy production in the quarter increased to 55,754 from 55,170, but the realized oil price fell to $77.50 from $88.0 a year ago. 

 

China Struggle with Growth Initiatives, Australian Economy Barely Expanded 

Stock markets in Asia moderately declined amid a lack of economic news, and investors focused on China's annual gathering of lawmakers. 

Elsewhere in the region, Australia's economy expanded 0.2% in the fourth quarter from the previous quarter, its ninth quarterly expansion in a row, the Australian Bureau of Statistics reported Wednesday. 

Australia's economy expanded at an annual pace of 1.5% in the fourth quarter, the slowest pace of growth in three years. 

For all of 2023, Australia clocked a 1.5% increase, largely driven by a rise in net exports, and consumer spending barely rose 0.1%. 

When counting the rising population in Australia, GDP per person actually shrank 1.0% in 2023. 

 

Japan Indexes Hold Steady Near Record Highs 

Stocks in Japan lacked direction following the weakness in New York in overnight trading. 

Tech stocks struggled for the second day in a row but traded near record highs as investors increased allocations to semiconductor-related companies that are likely to benefit from the boom in artificial intelligence applications. 

The Nikkei 225 Stock Average held steady at 40,098.24, and the Topix index gained 0.4% to 2,730.81. 

Tokyo Electron, Disco Corp., Screen Holdings, SoftBank, and Renesas Electronics decreased between 1% and 2%. 

Fast Retailing declined 0.7%, but Isetan Mitsukoshi advanced 2.9%. 

Among large banks, Mizuho Financial and Sumitomo Mitsui Financial advanced more than 1%, while Mitsubishi UFJ Financial added 0.5%.

 

China Stocks Struggle as Lawmakers Discuss Broader Issues

Stocks in Shanghai advanced in cautious trading as investors held out for more targeted financial and property market reforms. 

However, market indexes in Hong Kong rebounded on speculation that the latest property reforms in the city are enough to revive the moribund local property market and rising interest from mainland buyers. 

Investors are more focused on corporate earnings than the big-picture discussions by policymakers during the 7-day gathering of the rubber-stamp parliament and Chinese leaders.

Investors are generally disappointed with the lack of specific stimulus measures at the annual parliamentary meeting, arbitrary implementation at local levels, and rising debt levels at the central and local levels. 

Foreign investors are still lowering their allocation to Chinese stocks on the grounds of inconsistent economic reforms, a lack of earnings visibility, and expanded anti-espionage and anti-national security laws that could endanger intellectual property. 

Despite the gains in today's trading, the benchmark index in Hong Kong is the worst-performing market among the largest ten financial markets in the world. 

The CSI 300 index edged up a fraction to 3,568.20, and the Hang Seng index rebounded 2.3% to 16,539.01. 

Tech stocks advanced in Hong Kong ahead of JD.com's financial results in the hopes that the e-commerce company is set to announce earnings gains of at least 50% later today. 

Alibaba.com Group, Tencent, Meituan, and Baidu.com gained between 2% and 4%. 

Banks also participated in the rally, and HSBC and China Merchants Bank gained 2% and 4%, respectively. 

 

India Indexes Struggle to Advance Amid Valuation Worries and Higher Interest Rates

Stocks in Mumbai faced selling pressure, and valuation worries kept investors on the sidelines for the second week in a row. 

The Sensex and the Nifty indexes traded down amid moderate weakness in Asian markets and a lower closing in the U.S. for the second day in a row. 

Stocks in Mumbai are facing headwinds, and benchmark indexes are up about 2% in the year so far, lagging behind gains in Japan, the U.S., Germany, and France. 

Moreover, international rate jitters also compounded market anxieties ahead of the European Central Bank's rate decision on Thursday. 

The central bank is widely expected to hold its interest rates steady, but it may provide clues to future rate paths. 

International investors are struggling to increase their exposure to Indian stocks as higher interest rates in the U.S. and Europe provide tough comparisons, and earnings results in India have lagged market expectations. 

At the same time, stocks in India and Japan have benefited from foreign investors switching their investments from China following the protracted decline in the property market and the weaker-than-expected rebound in China's economy after the ending of zero COVID restrictions. 

The Sensex index decreased 0.2% to 73,551.08, and the Nifty index fell 0.3% to 22,294.60.

On the Mumbai stock exchange, 75 stocks traded at their 52-week highs and 34 stocks traded at their 52-week lows.

The yield on the 10-year Indian government bonds increased to 7.05%, and the Indian rupee strengthened to ₹82.85 against the U.S. dollar.