U.S. stocks experienced modest gains on Wall Street following a mixed report on the job market, which may delay further interest rate cuts by the Federal Reserve. In early trading on Friday, the S&P 500 rose by 0.2%, approaching an all-time high set earlier in the week. The Dow Jones Industrial Average increased by 147 points, or 0.3%, while the Nasdaq Composite remained relatively unchanged.
Investors reacted to data released by the Labor Department indicating that overall hiring in December fell short of expectations, even as the unemployment rate showed improvement. Treasury yields reflected this mixed sentiment, fluctuating in the bond market. This report marks the first clean assessment of the labor market in three months, following last fall’s government shutdown, which affected both the October and November job reports.
Economists anticipate that December’s jobs report will reveal continued subdued hiring, as many employers remain hesitant to expand their workforces. Should the data indicate significantly weaker job growth, it might strengthen the case for a reduction in interest rates at the Federal Reserve’s upcoming meeting scheduled for January 27-28, 2025. The Fed has previously lowered its benchmark rate three times in response to concerns over a softening labor market, despite inflation continuing to exceed its 2% target.
The day started with Wall Street leaning towards small gains ahead of the job report, with futures for both the S&P 500 and the Dow Jones up about 0.1%. Meanwhile, Nasdaq futures showed a slight increase of 0.2%. Homebuilder stocks continued their upward trend, albeit at a slower pace than the previous day when President Donald Trump announced a directive for the federal government to purchase $200 billion in mortgage bonds. This initiative aims to reduce mortgage rates and provide relief to potential homebuyers amid rising housing costs. Companies such as KB Home, D.R. Horton, and Lennar Corp. saw their shares increase by 1% to 2% overnight.
In contrast, shares of General Motors fell nearly 2% in premarket trading after the automaker projected a significant $6 billion loss for the fourth quarter due to sluggish electric vehicle sales. This announcement follows a previous forecast in October, where GM indicated a $1.6 billion charge linked to similar issues in the third quarter.
Global market sentiment also shifted as investors awaited additional economic data. In Europe, major indices performed positively, with the FTSE 100 in Britain gaining 0.6%, the CAC 40 in Paris increasing by 0.9%, and Germany’s DAX rising 0.4%. Asian markets also saw gains, with Japan’s Nikkei 225 up 1.6% and shares of Fast Retailing, owner of Uniqlo, jumping over 10.6% following a strong quarterly profit report.
In China, the Shanghai Composite Index rose 0.9% after inflation data revealed the highest rate of increase in nearly three years, indicating a potential improvement in consumer demand. On the other hand, shares of Rio Tinto in Australia dropped over 6.2% after the mining company confirmed it is in preliminary merger discussions with Glencore, a move that could create the largest mining entity globally.
In energy markets, oil prices gained after a tumultuous week, with benchmark U.S. crude increasing by 41 cents to $58.17 per barrel, and Brent crude rising by 44 cents to $62.43. Supply concerns persist as the U.S. continues to assert control over Venezuelan oil resources, seizing two oil tankers, including one under a Russian flag, that allegedly evaded sanctions.
As the day unfolds, market participants remain alert to the implications of the job report and other economic indicators, with potential impacts on both monetary policy and broader economic sentiment.
