On Friday, the stock market faced a significant setback, breaking a remarkable 9-week winning streak – the longest consecutive weekly run in the green since 2004. The Dow Jones Industrial Average and the S&P 500 stumbled, marking the worst start to a year since 2016, as new economic data fueled the ongoing debate over potential interest-rate cuts by the Federal Reserve.
Investors grappled with strong labor market data that could influence the Fed’s decisions on interest rates. Despite positive momentum earlier in the day, negative sentiment took hold, bringing an end to the impressive winning streak. The Dow and S&P 500 experienced their weakest start to a year since 2016.
The Dow Jones Industrial Average (^DJI) managed to crawl slightly above the flatline, while the benchmark S&P 500 (^GSPC) recorded a modest climb of nearly 0.2%. The tech-heavy Nasdaq Composite (^IXIC) also saw a slight uptick of about 0.1%.
Throughout the day, the major indexes exhibited volatility following the release of the December US jobs report. The report revealed that the US economy added 216,000 jobs in December, surpassing the 175,000 jobs expected by economists. The unemployment rate remained unchanged at 3.7%.
However, separate data from the Institute for Supply Management (ISM) presented a contrasting picture, indicating a slowdown in services activity for December. The services Purchasing Managers’ Index (PMI) for the month registered at 50.6, down from November’s reading of 52.7. While a reading above 50 signifies expansion, December’s figure marked the lowest level for services activity since May.
The first week of 2024 witnessed a substantial downturn in stocks, reversing the previous robust rally fueled by optimism surrounding potential monetary policy easing by the Federal Reserve. Doubts have now emerged regarding policymakers’ willingness to make a significant pivot.
Adding to the concerns, US bond yields continued to rise, with the 10-year Treasury yield (^TNX) increasing by approximately 5 basis points to 4.04%, following a surge on Thursday.
In other market developments, iPhone supplier Foxconn (2354.TW) announced an expected revenue drop in the first quarter due to slower market demand. Apple (AAPL) shares declined further, compounded by two analysts downgrading the tech giant over concerns about the upcoming smartphone’s sales. The decline in Apple’s share price resulted in a substantial loss of over $175 billion in market value.
As the market grapples with these uncertainties, investors are closely monitoring developments and remaining vigilant for potential shifts in economic indicators and central bank policies.
Source: Yahoo Finance
