The New York stock market managed a modest rebound due to bargain buying following a correction since the beginning of the year. Although the December employment report showed unexpectedly strong results, which seemed to diminish expectations for an early interest rate cut by the Federal Reserve (Fed), the stock prices closed slightly higher.
On the 5th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 37,466.11, up 25.77 points (0.07%) from the previous session.
The S&P 500 index, focused on large-cap stocks, rose 8.56 points (0.18%) to 4,697.24, and the tech-heavy Nasdaq index closed at 14,524.07, up 13.77 points (0.09%) from the previous session.
The S&P 500 rebounded for the first time in five trading days, and the Nasdaq also rose for the first time in six trading days. However, the gains were modest.
Despite strong December employment figures, the stock price increase was driven more by bargain buying following the correction than by disappointment over early rate cuts.
The U.S. Department of Labor's Employment Statistics Bureau reported that nonfarm payrolls increased by 216,000 in December, 43,000 more than November's 173,000. This figure significantly exceeded the 170,000 increase forecasted by experts surveyed by The Wall Street Journal (WSJ). The wage growth rate also surpassed expectations, rising 4.1% year-over-year compared to the anticipated 3.9%.
Immediately after the employment report was released, stock index futures declined and Treasury yields rose. The 10-year benchmark Treasury yield increased by about 6 basis points (bps) to reach an annual yield of 4.05%. The 2-year Treasury yield rose about 3 bps to 4.41% compared to the previous day’s close, and the 10-year yield increased about 5 bps to 4.04%.
However, market participants shifted their focus from the employment report to the Consumer Price Index (CPI) scheduled for release next week. The Institute for Supply Management (ISM) reported that the December non-manufacturing (services) Purchasing Managers' Index (PMI) came in at 50.6, below the market expectation of 52.5 and down from 52.7 in the previous month.
Among the 11 sectors within the S&P 500, eight sectors rose, excluding consumer staples, real estate, and healthcare. Apple’s stock fell 0.4% after its largest supplier, Foxconn, warned of weak first-quarter earnings and news emerged that the U.S. Department of Justice is preparing an antitrust investigation into Apple. Tesla’s stock dropped 0.2% following news that it will recall over 1.6 million vehicles in China.
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