Friday January 7th

U.S. stock index futures turned lower on Friday after the December jobs report came in short of expectations. Futures contracts tied to the Dow Jones Industrial Average fell 34 points, or 0.09%. S&P 500 futures advanced 0.07%, while Nasdaq 100 futures added 0.2%. The nonfarm payrolls report showed the U.S. economy added far fewer jobs for the month of December. The Labor Department Friday reported payroll growth of 199,000 in December, though economists had expected 422,000, according to Dow Jones. While the headline number disappointed, there were some things in this jobs report that pointed to an improving economic picture and higher inflation. Average hourly earnings increased by 0.6%, above expectations, and the unemployment rate fell to 3.9%, well below the 4.1% expected. That appeared to be what bond investors were focusing on as they sent yields higher again on Friday. The 10-year Treasury yield topped 1.76% on Friday, continuing its amazing 2022 run from a 2021 year-end level of 1.51%. Tech stocks were set to lose ground again on Friday as yields rose, continuing a theme this week of investors rotating out of the sector. In early trading Friday, GameStop shares soared more than 15% premarket following news that the company is venturing into the crypto world with investments in a marketplace for nonfungible tokens and digital currency partnerships to create games and other items. Elsewhere, shares of Starbucks fell about 3% after both RBC and Oppenheimer downgraded the coffee giant on the notion that the stock may have peaked in the near term and will struggle to grow profits ahead. Also, Discovery’s stock rose 3.8% after Bank of America upgraded the company, saying that it should gain as benefits with Warner Media become clearer. U.S. weekly jobless claims totaled 207,000 for the week ended Jan. 1, the Labor Department said Thursday. The reading was higher than the expected 195,000. But the private sector added 807,000 jobs in December, ADP said Wednesday, which was significantly higher than the expected 375,000. Stocks’ declines over the last two days follow the Wednesday release of the minutes from the Federal Reserve’s December meeting. The central bank is ready to dial back its economic help at a faster rate than some had anticipated. “A shift in Fed policy often injects volatility into markets,” said Keith Lerner, chief market strategist at Truist. “Stocks have generally had positive performance during periods where the Fed is raising short-term rates because this is normally paired with a healthy economy.” “The dip in stocks seems a bit overdone,” added UBS Global Wealth Management in a note to clients. “The normalization of Fed policy shouldn’t dent the outlook for corporate profit growth, which remains on solid footing due to strong consumer spending, rising wages, and still-easy access to capital.” The yield on the 10-year U.S. Treasury hit 1.75% on Thursday, sharply higher than last week’s 1.51% level. The move higher has hit growth-oriented areas of the market, since promised future profits start to look less compelling. The tech-heavy Nasdaq Composite is on track for its worst week since February 2021 as investors rotate out of growth and into value names. Shares in Asia-Pacific were mixed on Friday following heavy losses for some regional markets in the previous trading day, as investors continued to assess the impact of a potentially faster-than-expected policy tightening by the U.S. Federal Reserve. The Hang Seng index in Hong Kong jumped 1.82% to close at 23,493.38, leading gains among the major markets. Elsewhere, mainland Chinese stocks closed lower. The Shanghai composite fell 0.18% to 3,579.54 while the Shenzhen component shed 0.595% to 14,343.65. The Nikkei 225 in Japan shed earlier gains closed marginally lower at 28,478.56, adding to losses after a nearly 3% drop on Thursday. The Topix index also finished the trading day fractionally lower at 1,995.68. South Korea’s Kospi gained 1.18%, closing at 2,954.89. Oil prices edged up on Friday, heading for their biggest weekly gains since mid-December, fueled by supply worries amid escalating unrest in Kazakhstan and outages in Libya. Brent crude futures climbed 57 cents, or 0.7%, to $82.56 a barrel at 0403 GMT, after a 1.5% jump in the previous session. U.S. West Texas Intermediate (WTI) crude futures rose 67 cents, or 0.84%, to $80.13 a barrel, extending a 2.1% gain in the previous session. Gold prices inched up on the back of a weak dollar on Friday, but elevated U.S. Treasury yields set the metal on track for its biggest weekly decline in over a month as traders braced for sooner-than-anticipated U.S. rate hikes. Spot gold rose 0.2% to $1,792.13 per ounce by 5:28 a.m. ET, trading in a narrow $7 range, and was on course for a weekly drop of about 2%, the biggest since the week of Nov. 26. U.S. gold futures rose 0.2% to $1,792.50.