Wall Street is showing a lack of direction after indications that the job market remains robust, albeit possibly slightly overheated. The S&P 500 experienced a 0.1% decline early Thursday, potentially heading for its first weekly loss in the last 10 weeks. The Dow increased by 65 points, while the Nasdaq composite fell by 0.3%. Treasury yields saw an uptick. Walgreens Boots Alliance saw a significant 10% dip after nearly halving its dividend. This week, stocks have retraced their steps following a robust end to the previous year, largely fueled by optimism that inflation is moderating enough for the Federal Reserve to consider interest rate cuts in the coming year.
Early on Thursday, Wall Street markets showed a slight uptick as they sought their first gains of the new year.
Futures for the S&P 500 rose by 0.1% before the bell, with the Dow Jones Industrial Average increasing by 0.3%.
As earnings season is still a few weeks away, investors are focusing on additional data from the Labor Department. Thursday brings the government’s weekly jobless claims report, providing insights into the number of U.S. layoffs in a given week. On Friday, the more comprehensive jobs report will offer a more detailed look at the labor market for investors and economists.
Nearly two years ago, the Federal Reserve initiated its fight against inflation, raising its main interest rate to the highest level in two decades. Despite higher interest rates, the job market and the overall economy have largely held up, seemingly on track for the elusive “soft landing” the Fed has aimed for.
Traders are speculating that the Federal Reserve might opt to cut interest rates in March, with a high probability of a reduction of at least 1.50 percentage points during 2024, according to data from the CME Group. The current federal funds rate sits within a range of 5.25% to 5.50%.
Even if the Federal Reserve successfully achieves a controlled landing to mitigate high inflation without triggering an economic downturn, some critics argue that the stock market has surged too rapidly in recent months and is overdue for at least a temporary pause.
In Tokyo, a somber mood prevailed as the market reopened from the New Year holidays. Instead of the usual celebratory New Year’s bell ringing, a moment of silence was observed after a major earthquake on Monday left at least 77 people dead and dozens missing. Japan’s benchmark Nikkei 225 fell by 0.5% to 33,288.29.
Other Asian markets showed mixed results, with Hong Kong’s Hang Seng ending unchanged at 16,645.98, and the Shanghai Composite index dropping by 0.4% to 2,954.35. Australia’s S&P/ASX 200 declined by 0.4% to 7,494.10, South Korea’s Kospi fell by 0.8% to 2,587.02, while India’s Sensex climbed by 0.7%.
In European markets, Germany’s DAX gained 0.1%, the CAC 40 in Paris was up 0.2%, and Britain’s FTSE 100 edged 0.2% higher.
Benchmark U.S. crude added 77 cents to $73.47 a barrel in electronic trading on the New York Mercantile Exchange. It surged $2.32 a barrel on Wednesday amid concerns over the potential spread of the Israel-Hamas conflict to other parts of the Middle East.
Brent crude, the international standard, added 68 cents to $78.93 a barrel.
In currency trading, the U.S. dollar rose to 144.20 Japanese yen from 143.29 yen. The euro cost $1.0955, up from $1.0922.
Stocks experienced a decline on Wall Street on Wednesday as the slow start to the year continued for a second day. The S&P 500 and Dow both lost 0.8%, while the Nasdaq composite led the market lower with a 1.2% drop.
Featured Image: Freepik @ wirestock
