Wall Street Indexes Waver as Attention Shifts to Labor Market Conditions and Resurgent Inflation

Barry Adams
08 Jan, 2025
New York City

U.S. market indexes traded down following a sharp decline in the previous session amid renewed worries about the resurgent inflation and future rate paths. 

The S&P 500 index and the Nasdaq Composite declined 0.3% as investors dialed down expectations for additional rate cuts. 

Market sentiment soured after the ISM Services PMI showed the continued expansion in business activities, but participants raised inflation expectations in the months ahead. 

Despite the Fed's insistence that interest rate policies are restrictive, prices are still rising at nearly a 4% annual rate in the service sector, significantly higher than the target rate of 2%. 

Moreover, higher tariffs on imported goods are going to fuel inflationary forces, which could force the Fed to pivot to raising rates from its current plan to cut rates by as much as 100 basis points in the new year. 

Benchmark indexes are likely to stay under pressure ahead of Friday's non-farm payrolls report. 

The private sector added 122,000 jobs in December, the slowest pace of increase in four months, according to the latest estimate released by ADP.

ADP employment is highly unreliable, and the estimates are subject to sharp revisions in the months ahead. 

Initial jobless claims declined 10,000 to 201,000 in the week ending on Jan 4, the U.S. Department of Labor reported Wednesday. 

Stock markets are closed for trading on Thursday in honor of the late U.S. President, Jimmy Carter. 

 

U.S. Indexes and Treasury Yields

The S&P 500 index decreased 0.2% to 5,901.23, the Nasdaq Composite fell 0.1% to 19,476.35, and the Russell 2000 index inched down by 0.1% to 2,224.63. 

The yield on 2-year Treasury notes edged higher to 4.29%, 10-year Treasury notes inched up to 4.71%, and 30-year Treasury bonds increased to 4.96%.

WTI crude oil increased $0.60 to $74.85 a barrel, and natural gas prices edged up 13 cents to $3.55 a thermal unit.

Gold increased by $3.30 to $2,652.16 an ounce, and silver rose by $0.03 to $30.06. 

The dollar index, which weighs the US currency against a basket of foreign currencies, decreased by 0.51 to 109.18 and traded at a two-year high. 

 

U.S. Stock Movers 

Cal-Maine Foods increased 4.8% to $108.60 after the egg-producing company reported its latest quarterly results. 

Revenue in the quarter ending on November 30 increased 82% to $954.7 million from $523.3 million, net income advanced to $218.3 million from $16.6 million, and diluted earnings per share jumped to $4.47 from 35 cents a year ago. 

AAR Corp. jumped 4.5% to $64.50 after the aviation company reported better-than-expected fiscal second quarter results.

Revenue in the fiscal second quarter ending in November increased 26% to $686 million, net income swung to a loss of $30.6 million from a profit of $23.8 million, and diluted earnings per share were a loss of 87 cents compared to an income of 67 cents a year ago.