[New York Stock Market] Broad Decline Ahead of November Employment Report... Weakness in Cryptocurrency Stocks

Last Week's New Unemployment Claims Exceed Expectations
Focus on November Employment Report to Be Released Next Day
Bitcoin Falls Below $100,000...Related Stocks Decline

The three major indices of the U.S. New York Stock Exchange all closed lower on the 5th (local time). After the three major indices all hit new highs the previous day, investors adopted a cautious stance, leading the market to take a breather. Investors are focusing on the U.S. Labor Department's November employment report, which will be released the following day. Bitcoin, the leading cryptocurrency, fell after surpassing $100,000 for the first time the previous day and is currently trading below $100,000.

On this day in the New York stock market, the Dow Jones Industrial Average, centered on blue-chip stocks, closed at 44,765.71, down 248.33 points (0.55%) from the previous trading day. The S&P 500, focused on large-cap stocks, fell 11.38 points (0.19%) to 6,075.11, and the Nasdaq, centered on technology stocks, dropped 34.86 points (0.18%) to 19,700.26.

By individual stocks, cryptocurrency-related stocks fell together as Bitcoin dropped below $100,000. Coinbase, a cryptocurrency exchange, fell 3.13%, and MicroStrategy, which holds the largest amount of Bitcoin among listed companies, showed a 4.83% decline. Bitcoin was trading above $100,000 at 10 a.m. Eastern Time but was at around $99,010 as of 4:35 p.m.

Before the release of the November employment report the next day, the number of new U.S. unemployment claims for the previous week was disclosed that morning. According to the U.S. Labor Department, new unemployment claims for the week of November 24-30 increased by 9,000 from the revised figure of the previous week to 224,000, marking the highest level in a month. The expert forecast (215,000) was also exceeded by 9,000. Continuing claims, which count those claiming unemployment benefits for at least two weeks, recorded 1,871,000 for the week of November 17-23, down 25,000 from the revised figure of 1,896,000 the previous week. The market forecast (1,910,000) was 39,000 higher. Particularly, although new unemployment claims are announced weekly and tend to be volatile, the fact that they exceeded expectations drew attention to whether the labor market is slowing down. According to the private labor market research firm ADP's employment report released the previous day, private sector job creation in November increased by 146,000, falling short of both the market expectation (166,000) and the October figure (184,000).

The key focus is the November employment report to be released by the Labor Department on the 6th. This report reflects the most reliable employment trends. Experts expect nonfarm payrolls to have increased by 200,000 last month. The unemployment rate is forecast to have remained steady at 4.1%. The previous day, Jerome Powell, Chair of the U.S. Federal Reserve (Fed), reaffirmed a cautious approach to rate cuts, suggesting that last month's employment report will influence this month's interest rate decision. Powell, attending an event in New York, said, "We wanted to send a strong signal that we would support the market if the labor market continues to weaken," and assessed that "the economy is stronger than we expected last September."

Chris Larkin, Investment Managing Director at Morgan Stanley, said, "We will get a more comprehensive picture from the monthly jobs report the next day," and assessed, "For now, we do not expect the labor market to break down significantly."

The market is highly anticipating that the Fed will cut interest rates by 0.25 percentage points at the Federal Open Market Committee (FOMC) regular meeting scheduled for December 17-18, and then hold rates steady in January next year. According to the Chicago Mercantile Exchange (CME) FedWatch, the federal funds futures market on this day reflects a 71.8% chance that the Fed will cut rates by 0.25 percentage points at the December FOMC meeting and a 28.2% chance of holding rates steady. The probability of a rate hold next month after a small cut (0.25 percentage points) this month is 59.7%.

U.S. Treasury yields are mixed across maturities, remaining near flat. The U.S. 10-year Treasury yield, a global benchmark for bond yields, fell slightly to 4.18% from the previous trading day, while the 2-year Treasury yield, sensitive to monetary policy, rose 2 basis points (1 bp = 0.01 percentage points) to 4.14%.