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Market looks past December job losses in record-setting advance
08-Jan-21 16:15 ET
Dow +56.84 at 31097.91, Nasdaq +134.50 at 13201.98, S&P +20.89 at 3824.68

https://www.briefing.com/stock-market-update

[BRIEFING.COM] The S&P 500 (+0.6%), Nasdaq Composite (+1.0%), and Dow Jones Industrial Average (+0.2%) closed at fresh record highs on Friday despite a weak December employment report. The Russell 2000 (-0.3%) set an intraday all-time high at the open but closed lower.

Briefly, December nonfarm payrolls decreased by 140,000 (Briefing.com consensus +112,000), private sector payrolls decreased by 95,000 (Briefing.com consensus +100,000), and the unemployment rate was unchanged at 6.7%, as expected. The unexpected decline in payrolls was partially offset by large upward revisions to November payrolls.

The market presumably interpreted the report as a blip in the labor market recovery due to ongoing vaccination efforts and less consequential to the economic growth outlook due to prospects for more fiscal stimulus. It was also backwards-looking based on the renewed lockdown measures enacted to curb the spread of the coronavirus.

In the stock market, the S&P 500 consumer discretionary (+1.8%), real estate (+1.1%), information technology (+0.8%), and utilities (+0.9%) sectors carried the market higher, with Tesla (TSLA 880.02, +63.98, +7.8%) disproportionately aiding the consumer discretionary sector and Nasdaq.

On the downside, the materials (-0.5%), financials (-0.2%), industrials (-0.2%), and energy (-0.1%) sectors finished in the red. Micron (MU 77.42, -1.69, -2.1%) shares gave up an early 6% gain and closed lower despite reporting positive earnings results and upbeat guidance.

Separately, the S&P 500 briefly turned negative on reports that Senator Joe Manchin (D-WV) said he will not support $2000 stimulus checks, but Mr. Manchin quickly clarified that "if the next round of stimulus checks goes out, they should be targeted to those who need it." Stocks recovered.

President-elect Biden said he will propose a complete economic package next week that will include a range of issues and said the "price tag will be high."

Longer-dated Treasuries continued to face selling pressure amid expectations for economic growth and possibly inflation. The 10-yr yield increased another three basis points to 1.11%, while the 2-yr yield decreased one basis point to 0.13%. The U.S. Dollar Index increased 0.3% to 90.06. WTI crude futures increased 2.8%, or $1.44, to $52.25/bbl.

Reviewing Friday's economic data:

The December employment report disappointed on the headline level as nonfarm payrolls declined by 140,000 (Briefing.com consensus 112,000) against expectations for an increase. However, the drop was partially offset by a large upward revision to November figures and an increase in December average hourly earnings. December private sector payrolls decreased by 95,000 (Briefing.com consensus 100,000). December unemployment rate was unchanged at 6.7% (Briefing.com consensus 6.7%)
Capital markets are likely to look past this report and focus on the expected increase in fiscal spending once a new administration is inaugurated, but the December report shows that the labor market is facing an uphill climb.
Consumer credit increased by $15.3 bln in November after increasing a revised $4.5 bln (from $7.2 bln) in October.
The key takeaway from the report is that revolving credit decreased for the eighth time over the last nine months dating back to February, which preceded the initial pandemic lockdown period taking hold in the U.S.
Wholesale inventories were unchanged in November (Briefing.com consensus -0.1%) following an upwardly revised 1.3% increase (from +1.1%) in October.

Investors will not receive any notable economic data on Monday.

Russell 2000 +5.9% YTD
Nasdaq Composite +2.4% YTD
S&P 500 +1.8% YTD
Dow Jones Industrial Average +1.6% YTD

Market Snapshot
Dow 31097.91 +56.84 (0.18%)
Nasdaq 13201.98 +134.50 (1.03%)
SP 500 3824.68 +20.89 (0.55%)
10-yr Note -25/32 1.118
NYSE Adv 1604 Dec 1470 Vol 1.0 bln
Nasdaq Adv 1936 Dec 1784 Vol 7.1 bln

Industry Watch
Strong: Consumer Discretionary, Real Estate, Information Technology, Utilities
Weak: Financials, Materials, Industrials, Energy

Moving the Market

-- S&P 500, Nasdaq, and Dow close at fresh record highs

-- December employment report showed unexpected decline in payrolls

-- Lingering hopes for additional fiscal stimulus

Crude futures settle above $52 per barrel
08-Jan-21 15:30 ET
Dow +9.77 at 31050.84, Nasdaq +94.49 at 13161.97, S&P +13.28 at 3817.07

[BRIEFING.COM] The S&P 500 is trading higher by 0.3%, while the Russell 2000 is trading lower by 0.4%.

One last look at the S&P 500 sectors shows mixed results. Consumer discretionary (+1.2%), real estate (+1.0%), and utilities (+0.7%) are in the leadership positions, while the materials (-0.9%), industrials (-0.5%), and financials (-0.4%) sectors lag in negative territory.

WTI crude futures settled higher by 2.8%, or $1.44, to $52.25/bbl.