Thursday was a mixed day for the financial markets, as the Dow Jones gained 78 points, the S&P 500 lost 0.3%, and the Nasdaq dropped 0.5%, extending its losing streak to five days. Investors were on the edge of their seats for the labor data, while also examining economic data to predict the future course of monetary policy. This article gives a summary of the market trends, key sector movements, mortgage rate changes, PMI figures, labor market numbers, and global events that impacted various asset classes.
Market Performance and Sector Highlights
The energy and consumer discretionary sectors struggled, with ExxonMobil (-0.9%) and Amazon.com (-2.6%) lagging behind. On the other hand, the financial sector soared, led by a 2.4% rise in Allstate shares, after Morgan Stanley gave it a positive rating upgrade. JPMorgan Chase reached a record high during the session, boosting the sector’s overall growth.
Mortgage Rates and Housing Market
The average rate on a 30-year fixed mortgage inched higher to 6.62% as of January 4th, breaking a nine-week downward trend. Despite hopes of Federal Reserve rate cuts, Sam Khater, Freddie Mac’s Chief Economist, expects mortgage rates to continue drifting lower throughout the year. However, hurdles remain for aspiring homebuyers, such as low inventory and high home prices.
The S&P Global US Composite PMI for December 2023 was 50.9, indicating a slight increase in business activity. The service sector fueled the expansion, while manufacturing output suffered a setback. Service providers reported a stronger increase in new orders than goods producers. Despite higher input costs, inflation in output prices eased.
Labor Market and Unemployment Claims
The number of Americans applying for unemployment benefits fell by 18,000 to 202,000, hitting the lowest level since October. Continuing claims also dropped, highlighting the strength of the US labor market. The data backs the Federal Reserve’s capacity to keep a hawkish stance into 2024, if necessary, to curb inflation.
Global Market Highlights
The FTSE 100 bounced back from two sessions of losses, with energy stocks and British retailer Next leading the gains. JD Sports Fashion, however, suffered a major drop. In Europe, stocks closed higher, reversing the selling pressure from the beginning of the year, as markets analyzed economic data for hints on central bank actions.
Cryptocurrency and Oil Markets
Bitcoin and Ether saw gains, with Bitcoin leading with a 2.52% increase. WTI crude futures fell below $72 per barrel, affected by the latest EIA report, protests in Libya, and rising tensions in the Middle East. Despite a bigger-than-expected crude inventory drawdown, worries about lower demand and unexpected increases in Cushing and gasoline inventories swayed the market.
The recent market trends reflect a complex interaction of economic data, investor mood, and global events. As the markets face uncertainties related to interest rates, labor markets. And geopolitical conflicts, participants stay alert for clues on the future direction of monetary policy and economic patterns.