Antradienis, 27 vasario, 2024
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How US Stocks Survived a Roller-Coaster Week Amid Economic Chaos

The US stocks market ended a wild week on a flat note on Friday, after facing a barrage of economic data that sparked volatility. Investors had to digest a mixed bag of signals, from strong job creation and wage growth to weak service sector activity and global uncertainties. The Nasdaq 100 suffered its worst week since October, while the S&P 500 and the Dow Jones snapped a nine-week rally. The market reaction reflected the uncertainty over the direction of the US monetary policy and the outlook for the economy.

Job Market Strength

The US economy beat expectations by adding 216,000 jobs in December, the most in four months. Wage inflation picked up, pushing Treasury yields higher and reducing the odds of Fed rate cuts. Nvidia and AMD were among the few winners, rising more than 1.8% each, despite the tech sell-off.

AMD Stock price
AMD Stock price

Sector Performance

Airlines bounced back for a second day, recovering from a seven-day slump, after the Japan Airlines crash. Healthcare stocks lagged, with United Health dropping 1.5%, amid regulatory and political risks. The S&P 500 and the Nasdaq fell 1.8% and 3.8% for the week, respectively, while the Dow Jones lost 0.7%.

Economic Indicators

Factory orders surged 2.6% MoM in November, the biggest increase since January 2021, signaling a rebound in manufacturing. ISM Services PMI dropped to 50.6 in December, the lowest level since May 2021, indicating a slowdown in the service sector. Average hourly earnings for all workers rose by 0.4%, beating market forecasts, and suggesting higher consumer spending.

Job Market Overview

The US unemployment rate remained at 3.7% in December, as fewer people entered the labor force amid the Omicron variant. The government sector added an average of 56,000 jobs per month in 2023, while healthcare added 55,000. Total job gain for 2023 was 2.7 million, the lowest since 2019, excluding the pandemic year.

Wheat Futures Surge

Wheat futures soared above $6.2 per bushel, as China ramped up its purchases, sparking demand from commodity funds. USDA inspections revealed a sharp rise in wheat exports, boosting global supply projections.

Wheat futures price soared
Wheat futures price soared

Currency and Global Markets

The dollar index slipped to 102.0, as conflicting economic data clouded the Fed policy outlook. British pound stayed at $1.27; UK consumer credit jumped, and service sector output expanded strongly. Euro steadied around $1.09, as Eurozone inflation hit 2.9%, easing the pressure on rate cuts.

Cryptocurrency Movement

Bitcoin and Ether declined, with Bitcoin falling -2.22% and Ether down -2.10%, amid regulatory and security concerns.

Week Ahead

The next week will feature US GDP, inflation, trade, and producer prices data. Other countries, such as Switzerland, Mexico, Brazil, Australia, and India, will also release CPI data. China will publish consumer and producer inflation, trade, and new yuan loans data. Germany, the UK, and several other countries will report key economic indicators, shedding light on global economic trends.

Conclusion

The US market faced a week of mixed signals, driven by solid job numbers, divergent sector performances, and global economic factors. Investors remain cautious as they balance the trade-offs between economic growth, monetary policies, and geopolitical events. The upcoming week promises more insights, with a focus on important economic indicators both in the US and globally.

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