US stocks fall as nervous market awaits Friday’s inflation data and anticipates Fed’s response
U.S. stock indexes on Thursday all closed lower, as the Dow fell just into the red in the final minutes of trading, while investors waited for Friday’s November consumer price index report which could see annual inflation rise to 6.7%, its highest level in about 40 years.
While U.S. stocks have recovered to near record levels in the past week as the fear that the omicron variant of coronavirus might slow economic growth has faded, concern has risen over the potential for tighter monetary policy at next week’s Federal Reserve policy meeting.
How did stock benchmarks trade?
- The Dow Jones Industrial Average DJIA,
-0.00% gave up a fourth straight day of gains in the last five minutes of trading to close down 0.06 point or 0.0002% today to 35754.69. - The S&P 500 SPX,
-0.72% was off 33.76 points or 0.72% today to 4667.45 - The Nasdaq Composite Index COMP,
-1.71% , meanwhile slid 269.62 points or 1.71% today to 15517.37, after briefly turning positive near Thursday’s open. It was the ninth straight day that the Nasdaq finished with a move of 100 points or more, the longest streak since Mar 20, 2020 accordng to Dow Jones data.
On Wednesday, the Dow rose 35 points, or 0.1%, to 35,755, the S&P 500 added 0.3%, or 14 points, to 4,701, and the Nasdaq Composite gained 100 points, or 0.6%, to 15,787. The preliminary data from Pfizer PFE,
What drove the market?
Thursday’s uneven trading action came after three straight days of gains for equities that have brought the S&P 500 index within range of a record close, as investors shook off concerns about the omicron variant of the coronavirus and saw the downturn as a buying opportunity.
“For longer-term investors, negative news headlines and related market turmoil may present opportunities to add to risk exposures in some cyclical sectors (e.g., travel, leisure, hospitality) and to pare back on more growth-focused sectors such as technology,” wrote Nanette Abuhoff Jacobson, global investment strategist for Hartford Funds, in a recent blog.
Markets on Thursday were also digesting U.S. jobs data that showed new applications for unemployment benefits sank to a 52-year low of 184,000 for the week ended Dec. 4, the Labor Department said Thursday.
However, the big decline—new claims hit the lowest since September 1969—stemmed largely from holiday-related quirks in the data and is somewhat exaggerated.
“An impressive jobless claims report could not overcome rising risks to the short-term outlook that stem from virus jitters and fears of an aggressive Fed,” wrote OANDA’s Senior Market Analyst, Edward Moya, in a note on Thursday.
The slightly more downbeat close to the market on Thursday may be attributed to an earlier decision by Fitch Ratings to lower the credit rating of highly leveraged home builder China Evergrande 3333,
Markets appeared to be in something of a holding pattern in afternoon trading, as traders looked ahead to Friday’s November consumer inflation data.
“The next big move for equities will likely come after the US inflation report,” wrote Moya. “Which could tilt the scales on how fast the Fed tapers and when we can expect that first rate hike.”
The policy-setting Federal Open Market Committee will meet Dec. 14-15.
Which companies were in focus?
- Shares of Altice USA Inc. ATUS took a 5.3% dive in midday trading Thursday toward a 3-year low, and the second-lowest close since going public in June 2017, after longtime bullish analyst Philip Cusick at J.P. Morgan downgraded the telecommunications company.
- Brazilian digital bank Nu Holdings NU,
+14.78% priced its initial public offering on the New York Stock Exchange at $9 per share, valuing the Warren Buffett-backed lender at more than $41 billion. “This will mark one of the biggest publicly listed fintech companies in the world and provide a glimpse into the feasibility of running a large digital only bank,” said analysts at Saxo Bank. The stock closed down 8.2%. - After reporting a widening loss per share despite almost 30% sales growth on Wednesday afternoon, shares in mega-meme stock GameStop GME,
-10.30% closed down more than 10% on Thursday despite social media chatter that the videogame retailers loyal army of retail investors would be buying into the post-earnings dip. - Another high-profile new listing, HashiCorp HCP,
+6.49% , priced its IPO at $80, valuing the cloud-based software provider at $14 billion. Shares closed up 6.5% on Thursday midday. - Hormel Foods Corp. HRL shares rose 4.7% on Thursday after the food company reported fiscal fourth-quarter sales that beat the Street and reached a record.
How did other assets fare?
- The yield on the 10-year Treasury note TMUBMUSD10Y fell to around 1.497%, from 1.508% Wednesday. Treasury yields and prices move in opposite directions.
- The ICE U.S. Dollar Index DXY, a measure of the currency against a half-dozen other monetary units, was up 0.4% at 96.23.
- In oil futures, West Texas Intermediate crude CL00 for January delivery CLF22 ell $1.42, or 2%, to settle at $70.94 on the New York Mercantile Exchange.
- Gold futures GC00 for February delivery GCG22 declined by $8.80, or 0.5%, to settle at $1,776.70 an ounce
- The Stoxx Europe 600 Index SXXP closed less than 0.1% lower, while London’s FTSE 100 Index UKX slipped 0.2% on the session.
- In Asia, the Shanghai Composite IndexSHCOMP closed 1% higher, while the Hang Seng Index HSI rose 1.1% in Hong Kong and China’s CSI 300 000300 advanced 1.7%. Japan’s Nikkei 225 Index NIK,
-1.00% , however, closed down 0.5%.
Additional reporting by Steve Goldstein.
