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Traders work on the floor of the New York Stock Exchange (NYSE) during morning trading on January 3, 2024 in New York City.
Angela Weiss | AFP | Getty Images
Labor market remains tight
U.S. private sector payrolls rose by 164,000 jobs in December, according to payroll firm ADP. This number is higher than the 130,000 expected and the 101,000 that was revised downward in November. Combined with a decline in new jobless claims in the final week of 2023, this shows the U.S. labor market remains tight, although the pace of wage growth has slowed, ADP said.
Nasdaq’s struggles
U.S. stocks fell on Thursday, snapping the Nasdaq Composite Index’s longest losing streak since October 2022. Meanwhile, the 10-year Treasury yield rose 9 basis points to 4.003%. Europe’s Stoxx600 index rose 0.69%, its first gain this year. However, UK shares in JD Sports plunged 23% after the company announced lower-than-expected sales and profit margins through the end of 2023.
Lazada headcount reduction
Lazada began laying off employees on Wednesday, a person with direct knowledge of the matter told CNBC. Officials said “hundreds” of employees at all levels were affected, most of them based in Singapore. Alibaba’s e-commerce company operates in Southeast Asian countries and faces stiff competition from rivals such as Sea Ltd.’s Shopee and TikTok Shop.
new spin cycle
Peloton announced a partnership with TikTok, sending the company’s stock price up about 14%. The deal will launch a new fitness hub on TikTok known as #TikTokFitness Powered by Peloton, which will feature short-form fitness videos, long-form live classes, and content from TikTok creators and Peloton instructors.
[PRO] An overripe apple?
On the heels of Barclays’ downgrade of Apple, another Wall Street firm is questioning the S&P 500’s largest constituent. Piper Sandler downgraded the iPhone maker, raising concerns that iPhone sales would plateau and Apple stock would soar.
Stock prices have fallen for three consecutive days since the beginning of the new year. Megacap technology stocks are particularly struggling. After another weak session yesterday, Apple is down about 5.5% so far this year, Amazon is down his 4.85% and Microsoft is in the red by his 2.15%.
Yesterday’s losses in tech stocks caused the Nasdaq Composite Index to drop 0.56% on Thursday, marking its fifth straight decline and longest losing streak since October 2022. The S&P 500 fell 0.34%, falling for the fourth straight session. However, the Dow Jones Industrial Average managed to manage a modest gain.
But investors shouldn’t take the first three business days as tea leaves for how the rest of the year will go.
“Whether this continues or not, I don’t think the last few days matter too much,” Stephen Wieting, chief investment strategist at Citi Global Wealth, told CNBC. “It’s just a statistical coin toss.”
In fact, Wietling expects the S&P to rise more than 6% to around $5,000 by the end of the year.
John Stoltzfus, chief market strategist at Oppenheimer, is more optimistic. He believes the S&P could rise by more than 10% in 2024, buoyed by a better-than-expected earnings season.
“If you take into account the 11 rate hikes and four pauses so far, there was no recession.” [along with] “The resilience we’re seeing on the business, consumer, labor side, all of those things are looking very good,” he said.
There is evidence to support his prediction. Consumer strength is evidenced by data from Bank of America and Adobe. Spending on holiday items increased 0.3% year over year in the five weeks from Thanksgiving to Dec. 30, according to Bank of America credit and debit card data, and Nov. 1, according to Adobe Analytics. From December to December, online spending rose 4.9% to a record $222.1 billion. 31.
Meanwhile, economists expect today’s U.S. jobs report to show the labor market continues to cool to a reasonable temperature.
“The big picture is that the labor market is slowly slowing down in a very orderly way,” said Julia Pollack, chief economist at online job market ZipRecruiter.
The outlook for stocks for the rest of the year is positive after the first three days, as consumers remain strong, the job market remains moderate with no spikes in unemployment, and inflation (hopefully) continues to subside. Seems better than suggested.
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