Treasury Yields Extend Gains
January 3, 2024
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January 4, 2024By Johann M Cherian and Shristi Achar A
January 4, 20249:06 AM ESTUpdated 2 min ago
The Wall Street sign is pictured at the New York Stock exchange (NYSE) in the Manhattan borough of New York City, New York, U.S., March 9, 2020. REUTERS/Carlo Allegri//File Photo Acquire Licensing Rights
- Summary
- Companies
- US private payrolls increase in December – ADP
- Walgreens climbs after upbeat Q1 profit
- Mobileye tumbles after weak annual rev forecast
- Futures: Dow up 0.22%, S&P down 0.05%, Nasdaq down 0.42%
Jan 4 (Reuters) – The benchmark S&P 500 and the Nasdaq were on track for a lower open on Thursday after a jobs report indicated resilience in the labor market, tempering expectations on how early interest-rate cuts could begin.
Wall Street stumbled in the first two sessions of 2024, with the benchmark S&P 500 (.SPX) notching its worst two-day performance since late October as investors booked profits after a blistering rally last year.
Bets that the Federal Reserve could start reducing interest rates this year had driven much of the gains towards the end of 2023, though the latest minutes from the central bank’s December policy meeting did not offer many clues on when the easing might commence.
Traders see a 66.4% chance for at least a 25-basis point (bps) rate cut in March and a near 95% probability for May, according to the CME Group’s FedWatch tool.
An ADP National Employment report showed U.S. private employers hired more workers than expected in December, pointing to persistent strength in the labor market that should continue to sustain the economy.
Private payrolls increased by 164,000 in December, compared with a 101,000 rise the month before. The report comes ahead of the official employment data due on Friday.
“It puts a question mark as to whether or not tomorrow’s official employment data will be more than what markets expect,” said Peter Cardillo, chief market economist at Spartan Capital Securities.
“This plays into the hands of whoever is expecting a soft landing. But let’s not forget that we’ve had a big rally so what we’re seeing, what we saw in the past couple of days, was a technical adjustment.”
Separately, a Labor Department report showed Americans filing for state unemployment claims stood at 202,000 in the previous week, lower than expectations of 216,000 claims.
Yields on longer-dated U.S. Treasury tenors rose after the data, with the yield on the benchmark 10-year note climbing to 3.987%.
In company news, Apple (AAPL.O) slid 1.2% in premarket trading after brokerage Piper Sandler downgraded the iPhone maker to “neutral” from “overweight”, days after Barclays also cut its rating.
Micron Technology (MU.O) rose 0.5% after brokerage Piper Sandler upgraded its recommendation on the chipmaker to “overweight” from “neutral”.
At 8:38 a.m. ET, Dow e-minis were up 83 points, or 0.22%, S&P 500 e-minis were down 2.25 points, or 0.05%, and Nasdaq 100 e-minis were down 69 points, or 0.42%.
Among other movers, Mobileye Global (MBLY.O) sank 27.9% after forecasting preliminary fiscal 2024 revenue below estimates as the autonomous driving tech company expects its customers to pull back on orders as they clear excess inventory.
Dow component Walgreens Boots Alliance (WBA.O) added 0.9% after reporting better-than-expected profit for the first quarter on strength in its pharmacy operations.
Sportswear makers Nike (NKE.N) and Foot Locker (FL.N) shed 1.2% and 2.1%, respectively, after UK retailer JD Sports (JD.L) lowered its annual profit forecast.
Mattel (MAT.O) dropped 1.4% after brokerage Roth MKM downgraded the Barbie doll maker to “neutral”.
Reporting by Johann M Cherian and Shristi Achar A in Bengaluru; Editing by Devika Syamnath
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