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Market Snapshot

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

Dow 36231.66 -4.81 (-0.01%)
Nasdaq 14935.90 -144.96 (-0.96%)
SP 500 4677.03 -19.02 (-0.41%)
10-yr Note -4/32 1.764
NYSE Adv 1648 Dec 1571 Vol 903.0 mln
Nasdaq Adv 1898 Dec 2514 Vol 4.2 bln

Industry Watch
Strong: Energy, Financials, Utilities, Consumer Staples
Weak: Information Technology, Consumer Discretionary

Moving the Market

-- Growth stocks remained under pressure as 10-yr yield hit 1.80% intraday

-- Nonfarm payrolls increased by 199,000 (Briefing.com consensus 440,000), unemployment rate was 3.9% (Briefing.com consensus 4.1%), average hourly earnings rose 0.6% (Briefing.com consensus 0.4%)

-- Energy and financial stocks extended weekly gains

-- S&P 500 finds support at its 50-day moving average (4675)

Growth/value divide widens after employment report
07-Jan-22 16:20 ET
Dow -4.81 at 36231.66, Nasdaq -144.96 at 14935.90, S&P -19.02 at 4677.03

[BRIEFING.COM] The S&P 500 declined 0.4% on Friday, as money continued to flow away from growth stocks and into value stocks as the 10-yr yield hit 1.80% intraday. The latter was catalyzed by the December employment report, which depicted tight labor market conditions with a slowdown in hiring and strong wage gains.

The growth/value divide was loosely represented by the steep underperformance of the Nasdaq Composite (-1.0%) versus the Dow Jones Industrial Average (unch). More clearly, the Russell 3000 Growth Index fell 1.1% while the Russell 3000 Value Index rose 0.2%. The small-cap Russell 2000 declined 1.2%.

From a sector perspective, the S&P 500 information technology (-1.0%) and consumer discretionary (-1.7%) sectors underperformed in negative territory. Conversely, the energy (+1.5%) and financials (+1.2%) sectors rose more than 1.0%, extending their weekly gains to more than 10.0% and 5.0%, respectively.

Specifying the key employment figures, December nonfarm payrolls increased by just 199,000 (Briefing.com consensus 440,000), the unemployment rate remarkably declined to 3.9% (Briefing.com consensus 4.1%), and average hourly earnings rose 0.6% (Briefing.com consensus 0.4%).

The report reaffirmed expectations for the Fed to be more assertive in normalizing policy, even though jobs growth missed expectations and the labor force participation rate held steady at 61.9% (below pre-pandemic levels).

December still capped an impressive rebound for the labor market in 2021, and it appears to be approaching the Fed's goal of maximum employment. Furthermore, the Fed has suggested it's more attuned to keeping inflation pressures in check, and it wouldn't want the robust wage growth to exacerbate inflation pressures.

The 10-yr yield, as mentioned, hit 1.80% in the hours following the employment report, but ended the session at 1.77%, or four basis points above yesterday's settlement. The 2-yr yield decreased two basis points to 0.87%. The U.S. Dollar Index fell 0.6% to 95.75. WTI crude futures fell 0.6%, or $0.46, to $78.94/bbl.

For what it's worth, the S&P 500 closed just above its 50-day moving average (4675), which is a key technical level that has attracted dip-buying efforts in the past.

Reviewing Friday's economic data:

December payrolls growth was quite weak, but that shouldn't remain the case as we get past the Omicron hurdle. The unemployment rate fell to an astounding 3.9%, although the labor force participation rate did not improve. It held steady at 61.9%. Average hourly earnings were up a stronger than expected 0.6%.
December nonfarm payrolls increased by 199,000 (Briefing.com consensus 440,000). The 3-month average for total nonfarm payrolls decreased to 365,000 from 425,000 in November. November nonfarm payrolls revised to 249,000 from 210,000. October nonfarm payrolls revised to 648,000 from 546,000.
December private sector payrolls increased by 211,000 (Briefing.com consensus 420,000). November private sector payrolls revised to 270,000 from 235,000. October private sector payrolls revised to 714,000 from 628,000.
December unemployment rate was 3.9% (Briefing.com consensus 4.1%), versus 4.2% in November. Persons unemployed for 27 weeks or more accounted for 31.7% of the unemployed versus 32.5% in November. The U6 unemployment rate, which accounts for unemployed and underemployed workers, was 7.3%, versus 7.7% in November.
December average hourly earnings increased 0.6% (Briefing.com consensus 0.4%) versus a 0.4% increase in November. Over the last 12 months, average hourly earnings have risen 4.7%, versus 5.1% for the 12 months ending in November.
The average workweek in December was 34.7 hours (Briefing.com consensus 34.8), versus a downwardly revised 34.7 hours (from 34.8 hours) in November. Manufacturing workweek decreased 0.1 hours to 40.3 hours. Factory overtime decreased 0.1 hours to 3.2 hours.
The labor force participation rate held steady at 61.9%.
The employment-population ratio increased to 59.5% from 59.3% in November.
The key takeaway from the report is that it shows the Fed is close to meeting its objective of maximum employment and that wage growth in a tight labor market risks feeding into more persistent inflation pressures that will need to be addressed with a tighter policy position.
Consumer credit increased by $39.9 bln in November. The prior month saw a downward revision to $16.1 bln from $16.9 bln.
The key takeaway from the report is that increase in consumer credit in November was the largest monthly increase December 2010.

Looking ahead, investors will receive Wholesale Inventories for November on Monday.

Dow Jones Industrial Average -0.3% YTD
S&P 500 -1.9% YTD
Russell 2000 -2.9% YTD
Nasdaq Composite -4.5% YTD

Crude futures settle lower but still end higher for the week
07-Jan-22 15:30 ET
Dow +69.13 at 36305.60, Nasdaq -124.46 at 14956.40, S&P -12.62 at 4683.43

[BRIEFING.COM] The S&P 500 is down 0.2% and is on track to end the week with a 1.7% decline.

One last look at the sector performances shows consumer discretionary (-1.6%) leading the decline as the only sector down more than 1.0% today. The energy (+1.4%), financials (+1.0%), and utilities (+1.0%) sectors are each up by at least 1.0%.

WTI crude futures settled lower by 0.6%, or $0.46, to $78.94/bbl. For the week, crude futures were up 5.0%.