[New York Stock Exchange] Mixed Close on Diverging Employment and Service Sector Data... Alphabet Surpasses Apple in Market Cap for First Time in 7 Years

Dow and S&P Decline After Early Gains
November Job Openings Hit Lowest Level in a Year; December Private Employment Also Misses Expectations
U.S.-Venezuela Oil Purchase Deal Sends Global Oil Prices Lower

The three major indices of the US New York stock market closed mixed on the 7th (local time). After an initial rise, the market became more cautious as it digested strong service sector data alongside weaker-than-expected employment indicators. Amidst this, Alphabet, Google's parent company, surpassed Apple's market capitalization for the first time since 2019.

On the 7th (local time), a trader is working on the trading floor of the New York Stock Exchange (NYSE) in the United States. Photo by AFP

On this day at the New York Stock Exchange, the blue-chip-focused Dow Jones Industrial Average closed at 48,996.08, down 466 points (0.94%) from the previous trading day. The S&P 500, which tracks large-cap stocks, fell 23.89 points (0.34%) to 6,920.93, while the technology-heavy Nasdaq Composite rose 37.102 points (0.16%) to close at 23,584.275.

By stock, Alphabet rose 2.5%, reaching a market capitalization of 3.89 trillion dollars and overtaking Apple for the first time since 2019. Apple fell 0.77% on the day, with its market cap dropping to 3.85 trillion dollars. Financial and energy stocks, which had shown strength earlier this year, both declined. JPMorgan fell 2.28%, while Bank of America and Wells Fargo dropped 2.85% and 2.17%, respectively. Chevron and ExxonMobil, which had previously risen on expectations of Venezuelan oil infrastructure reconstruction, fell 0.88% and 2.11%, respectively. Defense industry stocks also weakened. After President Donald Trump urged defense companies to expand investment in production facilities and research and development (R&D), and announced a ban on dividends, share buybacks, and limits on executive compensation, Northrop Grumman fell 5.48% and Lockheed Martin dropped 4.78%.

Despite last weekend's US airstrikes on Venezuela and the arrest of President Nicolas Maduro and his wife, investors appeared largely unfazed. The New York stock market had recorded gains for two consecutive days since the start of the week.

Keith Buchanan, Senior Portfolio Manager at Globalt Investments, commented, "From a stock market perspective, events unfolding in South America have not changed the outlook for US growth," adding, "While it is true that the market is somewhat complacent about rising geopolitical risks overall, I do not think the Venezuela situation has either worsened or eased the circumstances."

Angelo Kourkafas, Senior Global Investment Strategist at Edward Jones, analyzed, "The arrest of President Maduro is a geopolitically noteworthy event, but it does not have an immediate impact on oil supply, which is what the market truly cares about."

Investors' attention shifted from geopolitical variables to economic indicators that could influence the Federal Reserve's monetary policy path. Among the indicators released that day, the service sector showed strength, while the pace of employment recovery fell short of expectations, resulting in mixed signals.

According to the US Department of Labor, job openings in November of last year totaled 7,146,000. This figure was below the market forecast of 7.6 million compiled by Bloomberg, marking the lowest level in about a year. The October job openings figure was revised down from 7.67 million to 7,449,000, and the November number was even lower. Both new hires and layoffs decreased. This is interpreted as a sign that companies are becoming more cautious in hiring amid ongoing policy uncertainties such as tariffs.

The private employment indicator released the same day also showed a recovery, but the pace was below expectations. According to US private labor market research firm ADP, new jobs in the private sector increased by 41,000 in December compared to the previous month. This marked a turnaround from a decrease of 29,000 in November, but the increase was below the Dow Jones estimate of 48,000. This heightened concerns about a gradual cooling of the job market.

In contrast, the US service sector performed unexpectedly well. The Institute for Supply Management (ISM) reported that the Non-Manufacturing Purchasing Managers' Index (PMI) for December was 54.4. This was a 2.2-point increase from the previous month (52.2) and significantly exceeded the market expectation of 52.6. A PMI above 50 indicates economic expansion, while below 50 signals contraction.

This week, market attention is shifting to the December employment report from the Bureau of Labor Statistics (BLS), which reflects both private and public sector employment. According to Dow Jones forecasts, non-farm payrolls are expected to have increased by 73,000 last month, surpassing November's 64,000. The unemployment rate is projected to be 4.5%, down 0.1 percentage point from the previous month. The report is scheduled to be released in two days, on January 9.

US Treasury yields are declining, especially for long-term bonds. The yield on the 10-year US Treasury, the global benchmark for bond yields, fell by 3 basis points (1bp = 0.01 percentage point) from the previous day to 4.15%. The yield on the 2-year US Treasury, which is sensitive to monetary policy, remained at the previous day's level of 3.47%.

International oil prices fell following news that the United States had reached an agreement with Venezuela to directly purchase and sell up to 50 million barrels of Venezuelan crude oil. West Texas Intermediate (WTI) crude fell 1.14 dollars (2%) from the previous session to 55.99 dollars per barrel, while Brent crude, the global benchmark, dropped 0.74 dollars (1.2%) to 59.96 dollars per barrel.