New York Stock Market Rises Early Ahead of Employment Report

Major indices on the U.S. New York Stock Exchange showed early gains on the 7th (local time) ahead of the employment report release the next day.

At around 10:40 a.m. at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average was trading at 36,084, up 0.08% from the previous close. The S&P 500, which focuses on large-cap stocks, was up 0.67% at 4,579, while the tech-heavy Nasdaq was up 1.09% at 14,300.

Currently, all 10 sectors in the S&P 500, except for healthcare stocks, are rising. JetBlue is up 14% from the previous close on better-than-expected earnings and an upward revision of its annual guidance. Alphabet, Google's parent company, is up more than 5% on expectations driven by its AI language model ‘Gemini’. AMD jumped nearly 7% after unveiling a new AI semiconductor chip challenging Nvidia. Nvidia, a leading AI stock, also rose about 2%. However, ChuYi fell nearly 3% due to disappointing Q4 sales forecasts. GameStop initially showed a decline due to weak quarterly results but is currently rebounding.

[Image source=Reuters Yonhap News]

Investors are trying to gauge the future direction of the Federal Reserve's (Fed) monetary policy through key indicators ahead of the Labor Department's November nonfarm payroll report to be released the next day. The ADP employment report and job postings released this week have added signals that the labor market is showing signs of cooling due to accumulated tightening effects. However, the unemployment data released on this day fell short of expectations. The U.S. Labor Department reported that initial jobless claims for the week of November 26 to December 2 increased by 1,000 to 220,000, slightly below the Wall Street Journal (WSJ) consensus estimate of 222,000. Additionally, according to the layoff report by Challenger, Gray & Christmas (CG&C), planned layoffs in November rose 24% month-over-month to 45,510 but decreased 41% year-over-year.

Accordingly, investors are paying closer attention to the signals the employment report will show the next day. Wall Street estimates that November nonfarm employment will increase by 190,000. Economic media outlet CNBC reported, "Investors are in a confused state ahead of the main event, the employment report release," adding, "Investors hope the labor market is cooling and that the Fed will pause rate hikes."

Currently, the market has largely priced in a rate hold at the December Federal Open Market Committee (FOMC) meeting next week. According to the CME FedWatch tool, federal funds futures reflect more than a 97% probability that the Fed will hold rates steady this month. The probability that the hold will continue through January next year exceeds 80%. The chance of a rate cut starting in January is priced at 16%. The prevailing view is that rates will be cut by at least 0.25 percentage points in March or May next year.

However, some on Wall Street remain cautious that market expectations for rate cuts may be excessive. In a foreign media survey released the previous day, half of economic experts responded that the Fed would hold rates steady at least until July next year and that any rate cuts would be aimed at adjusting real interest rates.

In the New York bond market, the 10-year U.S. Treasury yield is trading around 4.14%. The 2-year yield, which is sensitive to monetary policy, slightly declined to 4.59%. The dollar index, which measures the value of the U.S. dollar against six major currencies, fell more than 0.4% to 103.7. The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), known as Wall Street's fear gauge, rose more than 0.5% to around 13.

European stock markets are down. Germany's DAX index fell 0.19%. The UK's FTSE index dropped 0.13%, and France's CAC index declined 0.18%.