Stocks are little changed as investors assess strong jobs report: Live updates

Stocks finished higher Friday, with the S&P 500 notching its highest level of 2023.

The S&P 500 added 0.41% to settle at 4,604.37, while the Nasdaq Composite rose 0.45% to finish at 14,403.97. The Dow Jones Industrial Average gained 130.49 points, or 0.36%, to end at 36,247.87.

— Samantha Subin

U.S crude oil rallied on Friday, but still booked its seventh straight week of losses as record production and demand worries weigh on prices.

The West Texas Intermediate contract for January rose $1.89, or 2.73%, to settle at $71.23 a barrel. The Brent crude contract for February gained $1.79, or 2.42%, to settle at $75.84 a barrel.

U.S. crude and the global benchmark lost about 4% for the week despite Friday’s rebound. The last time WTI booked a seven-week losing streak was five years ago.

Traders have become increasingly bearish in recent weeks as record production in the U.S. collides with weakening demand in China.

Several OPEC members and allies like Russia have promised production cuts of 2.2 million bpd for the first quarter of 2024 in an effort to lift prices.

But traders are skeptical that they will actually deliver given recent divisions within the group.

— Spencer Kimball

Even if there isn’t a recession in 2024, it’s hard to imagine a sustainable stock rally without a meaningful lowering of interest rates, according to Marko Kolanovic, chief global markets strategist at JPMorgan.

“This is a catch-22 situation, in which risk assets can’t have a sustainable rally at this level of monetary restriction, and there will likely be no decisive easing unless risky assets correct (or inflation declines due to, for example, weaker demand, thus hurting corporate profits),” Kolanovic wrote on Friday.

“This would imply that we would need to first see some market declines and volatility during 2024 before easing of monetary conditions and a more sustainable rally,” Kolanovic said.

The strategist is not optimistic on the 2024 outlook. In his bullish scenario, he expects stocks can outperform bonds or cash by roughly 5%, but in the event of a recession, he expects they will underperform cash by about 20%.

— Sarah Min, Michael Bloom

The unemployment rate for Asian workers and Black men rose in November, as opposed to a decline in the overall jobless rate and for white and Hispanic Americans.

The overall unemployment rate declined 0.2% to 3.7% in November. But Asian Americans saw a 0.4 percentage-point jobless rate rise to 3.5%, while Black men aged 20 or older also saw a 1.1 percentage-point spike to 6.4%.

The participation rate for Asian workers declined to 65% from 65.3%. On the other hand, the participation rate for Black males increased to 69.2% from 67.5%.

“The rise in unemployment is because more workers are optimistic, coming back in or entering the labor market for the first time, and many of them are finding jobs. And many of them are not, which is why the unemployment rate went up,” Gould added.

Readers can find the full story here.

— Lisa Kailai Han

With a hotter-than-expected employment report and sky-high tech valuations, markets are looking at volatility in the early part of next year, said Saira Malik, chief investment officer of asset management firm Nuveen.

“Santa visited the markets early this year for three reasons and that’s inflation which is moderating, the Fed signaling a pause and economic growth which is cooling, but not too cold, and today’s jobs data supports that,” Malik told CNBC’s “Squawk Box” earlier Friday. “But there is one wrinkle, and that’s average hourly earnings at 0.4% is inflationary, and I think this is what’s going to set up a complicated backdrop for the markets in 2024.”

Malik noted that broader market valuations are at a premium given the nearly 20% run in the S&P this year, making earnings all the more important next year, when companies will need to hold onto pricing power in a moderating inflation environment. She believes that the Magnificent 7 group of mega-cap tech will not perform as well next year as it did against the broader market this year.

— Pia Singh

U.S. crude oil rallied on Friday but is on pace for seven straight weeks of losses for the first time in five years.

The West Texas Intermediate contract for January gained $1.86, or 2.68%, to trade at $71.22 a barrel. The Brent contract for February rose $1.82, or 2.46%, to $75.87 a barrel.

Phil Flynn, an analyst with Price Futures Group, described Friday’s rally as a “dead cat bounce” with prices trying to find support after a long losing streak.

Traders have been bearish with record production in the U.S. colliding with weakening demand in China.

Oil is still down about 4% for the week after Wednesday’s selloff, when U.S. crude closed below $70 for the first time since late June.

Tamas Varga at PVM Oil Associates described Friday’s rally as a “textbook pre-weekend short-covering.” Varga also pointed to mortar fire at the U.S. embassy compound in Baghdad.

Traders have been skeptical OPEC will deliver on first quarter production cuts, but a Reuters survey earlier this week found that group’s output did decline in November for the first time in four months.

Saudi Arabia and Russia this week sought to convince markets that OPEC and its allies will come through with the promised 2.2 million bpd in cuts and are prepared to extend or even deepen them if necessary.

— Spencer Kimball

Investors should be careful of what they wish for when it comes to the Federal Reserve easing back on interest rates in 2024, according to Larry Jeddeloh of TIS Group and The Institutional Strategist newsletter.

“Historically, the price action in stocks after the first rate cut is not positive,” Jeddeloh wrote late Thursday. “The signal that first cut sends is a slowdown/recession is underway and all too often, the Fed has been too late and too data driven to anticipate that downturn.”

Jeddeloh foresees a secular rally coming in commodities and commodity stocks. “[T]hey are cheap, out of favor, under-owned, and under-represented in market indices … Crude oil at $70 is too low. U.S. Natural Gas at $3 is too low when European gas trades over $10. Gold at $2,000 is too low … If uranium really is the future because nuclear power stages a come-back, $80 will be too low.”

— Scott Schnipper

The second treatment known as Lyfgenia was developed by Bluebird Bio. It works by altering cells to produce a substitute for hemoglobin.

While CRISPR shares hit a 52-week high earlier Friday, the stock is trading down 6% after the announcement. Shares have gained more than 60% year to date. Vertex shares were down about 1% recently, and have gained more than 20% so far this year.

The approval for Bluebird Bio’s therapy came a bit earlier than had been anticipated. Its shares were trading up more than 7% before being halted for news. The stock is down 23% over the past year.

There are still issues that will need to get hashed out in the coming months, including how to pay for these pricey treatments.

— Christina Cheddar Berk

These are the stocks moving the most in midday trading:

• Paramount — Paramount shares were up more than 12% after multiple reports said Skydance and RedBird Capital were pursuing a takeover of National Amusements, which owns the majority of the media giant’s voting shares.
• Lululemon — Shares jumped by more than 4% as traders assessed the company’s latest quarterly figures.
• HashiCorp — Shares of the software firm plunged more than 18% after TD Cowen downgraded them to market perform from outperform.

Read the full list of stocks moving here.

— Lisa Kailai Han

Job growth in November was dominated by health care and social services, which added more than 93,000 jobs, according to the Bureau of Labor Statistics.

Elsewhere, government jobs jumped by 49,000, while leisure and hospitality added 40,000 net hires. Workers returning from strikes also boosted manufacturing and information, which includes some of the technical job categories in Hollywood.

Check out the chart of the job gains and losses by sector here.

— Jesse Pound

PARA rallies

The latest strong job report could push yields modestly higher toward 4.3%, according to Peter Tchir, head of macro strategy at Academy Securities. Tchir also believes the data lowers the likelihood of rate cuts next year and pushes back the timing.

“This data gives Powell the opportunity to sound hawkish next week (which he always tries to do) and actually be believed by the market (which doesn’t always happen),” Tchir said in a Friday note.

While Tchir is predicting a hard landing for the economy, he noted that the jobs report doesn’t support this view.

“So, if equities are being held back because of growth fears (which is my belief over the past few days), then this data should free risk assets to rally,” Tchir said. “The relief from hard landing will outweigh marginally higher bond yields. This data should be good for the laggard outperformance trade!”

— Hakyung Kim

A closely watched survey from the University of Michigan showed consumer sentiment rise to 69.4 and the best level since July, and top a Dow Jones estimate of 62.4.

Inflation expectations also plunged, with the one-year outlook for the inflation rate dropping to 3.1%. That’s down from 4.5% in November. The five-year outlook moved to 2.8% from 3.2%.

— Jeff Cox, Samantha Subin

A slightly stronger-than-expected jobs report from the Labor Department on Friday could mean the Federal Reserve will need to keep interest rates higher for longer, according to FWDBONDS chief economist Christopher Rupkey.

“Net, net, the labor market isn’t cooling down, it is heating back up which might delay inflation’s return to target so Fed officials could keep rates higher for longer next year,” Rupkey said. “Those 100 bps of rate cuts the market is talking about in 2024 will be just a fairy tale if the labor market does not rebalance further in the months ahead.”

Rupkey added that last month’s promising uptick in the jobless rate “turned out to be a mirage,” and noted Wall Street shouldn’t “be too quick to assume big rate cuts next year is the message because the labor market is not slowing down.”

— Brian Evans

Bitcoin Coin Metrics is up 12.6% week to date, on pace for its third consecutive weekly gain.

Ether Coin Metrics reached a high of $2,390.7 Thursday night. This marked its highest level since May 11, 2022 when Ether traded as high as $2,450.

Week to date, Ether is up nearly 13%, also on track for its third straight week of gains and its best week since Nov. 3^, when ether gained 14.84%.

Bitcoin and ether

Here are some of the names moving before the bell:

• Carrier Global — Shares popped 5.5% after Carrier agreed to sell its Global Access Solutions Business for $4.95 billion in cash to Honeywell. Honeywell‘s stock slid 2.5%.
• First Solar — The solar stock popped 3.8% following an upgrade by Morgan Stanley to overweight from equal weight. The bank said it sees a number of drivers that can push shares sharply higher in 2024.
• Qorvo — The chip stock gained 1.7% after being upgraded to overweight from equal weight by Morgan Stanley, who citing demand growth in China and the benefit from the transition to 5G.

To see more stocks moving in the premarket, read the full story here.

— Michelle Fox

The U.S. economy added 199,000 in November. Economists polled by Dow Jones expected a print of 190,000.

While the headline number was about in line with expectations, the U.S. unemployment rate fell to 3.7%. Economists had forecast the jobless rate to stay unchanged at 3.9%.

— Fred Imbert

Don’t expect rate cuts so soon, according to Bank of America.

The Wall Street firm’s FX strategy team said in a Friday note that “once again the market has jumped the gun on rate cuts” and gotten ahead of itself with expectations for five rate cuts from the Federal Reserve and six from the European Central Bank.

“We would argue that the market has once again run ahead of itself,” Bank of America said. “Core inflation remains high and stickier than headline inflation. We see a risk of higher/stickier headline inflation early next year as the strong base effects from energy prices fade.”

While disinflation in the Eurozone at the current rate could support rate cuts beginning in March, but that outcome looks less likely for the Fed, wrote FX strategist Claudio Piron.

“In any case, given aggressive market pricing, we see the balance of risks for central banks doing less next year, particularly in a soft landing scenario,” he said.

— Samantha Subin

Shares of Carrier Global were up more than 3% after the company agreed to sell its Global Access Solutions business — which makes locks for hotels, among other businesses — for $4.95 billion in cash to Honeywell.

Honeywell’s strong track record delivering building automation products and services makes this a natural fit that will create a leading security platform with forecasted annual revenue in excess of $1 billion,” Honeywell CEO Vimal Kapur said in a statement.

“By leveraging the capabilities of the combined company’s advanced security and safety systems, customers will be able to maximize their performance, efficiency and cost-effectiveness and create long-term, sustainable value,” Kapur added.

Honeywell shares dipped 0.6% in the premarket.

CARR jumps

The headquarters of Barclays Plc beyond the West India Quay Docklands Light Railway station in the Canary Wharf financial district in London, UK, on Monday, March 20, 2023.

Bloomberg | Bloomberg | Getty Images

Recent data suggests that the U.S. labor market is softening, and expectations ahead of Friday’s crucial nonfarm payrolls figure are “skewed to the downside,” according to Julien Lafargue, chief market strategist at Barclays Private Bank.

“A significant positive surprise would challenge the market’s consensus that interest rate cuts will materialise around the beginning of Q2 2024,” Lafargue said.

“On the other hand, a significant disappointment could force the market to reassess its soft landing scenario. A number broadly in line with expectations would, in our view, probably be the most supportive outcome for stocks.”

– Elliot Smith

European markets were little changed at Friday’s open.

The pan-European Stoxx 600 index hovered around the flatline in early trade, with mining stocks dropping 0.6% while oil and gas climbed 0.5%.

Japan’s third-quarter gross domestic numbers have been revised downward in a move at odds with economists’ expectations.

The world’s third-largest economy shrank by 0.7% quarter-on-quarter, a steeper-than-expected decline compared with expectations of a 0.5% contraction as per the first estimate as well a Reuters poll.

On an annualized basis, GDP shrank by 2.9% in the third quarter, faster than the first estimate of 2.1% and economists’ expectations of 2%.

— Lim Hui Jie

India’s central bank has held its key lending rate at 6.5%, the fourth straight time that it has left the repurchase rate unchanged.

Reuters reported that all six members of the RBI’s monetary policy committee unanimously voted to hold the repo rate.

This comes as inflation in the country has slowed for three straight months, coming in at a four-month low of 4.87% in October. Since May 2022, the RBI has raised the repo rate by a total of 250 basis points.

— Lim Hui Jie

Real wages in Japan have fallen for a 19th straight month, sliding 2.3% year-on-year in October.

While the drop was softer than the revised 2.9% fall seen in September, the decline in real wages will be something that may prevent the Bank of Japan from moving away from negative interest rates.

The BOJ has said that sustainable pay increases are a key metric to consider before dismantling its ultra-loose monetary policy.

— Lim Hui Jie

The percentage of individual investors who are pessimistic over the six-month outlook for stocks jumped to 27.4% in the latest survey from the American Association of Individual Investors, and up from 19.6% last week — which had marked the fewest bears since January 2018.

Historically, bears average out at about 31% each week, and have now stood below average for five straight weeks.

The ranks of bullish investors dipped to 47.3% in the latest week, the first time they’d fallen in five weeks, and down from 48.8% last week — which had marked the greatest number of optimists only since last August. The historical average of bulls is 37.5%, and optimists have also now come in above average for five consecutive weeks, as well as six weeks in nine.

The AAII characterized the latest sentiment readings as returning “to their respective typical ranges.”

— Scott Schnipper

The tech-heavy Nasdaq Composite is on its way to a sixth straight positive week, on pace for a 0.24% gain.

It may not seem like much of an increase, but if the Nasdaq manages to keep it, that will mark the index’s longest winning streak since its eight-week run which ended in June.

Names in the index that have had a good week thus far include Alphabet, which is up 3.8%, and Advanced Micro Devices, up 5.8% week to date.

Both stocks rallied sharply Thursday, with Alphabet advancing more than 5% after the company announced its Gemini AI model. AMD popped nearly 10% a day after the semiconductor company announced its newest AI chip – and Meta and Microsoft said they would use it.

The week is looking less upbeat for the S&P 500 and the Dow Jones Industrial Average, both of which are about to break a five-week winning streak.

–Darla Mercado, Chris Hayes

The Labor Department is slated to report November’s nonfarm payrolls report on Friday morning – and the numbers just might show an increase in hiring.

Economists polled by Dow Jones are expecting 190,000 positions were added last month, an increase from October’s 150,000.

But traders – and the Federal Reserve – will be looking beyond just the headline numbers. Key metrics, including wage growth and the unemployment rate, will be important indicators as to whether the economy has sufficiently cooled.

Read more about the upcoming jobs report here.

–Darla Mercado, Jeff Cox

A few names made notable moves after the market closed.

Lululemon Athletica dropped more than 2% after the athletic apparel retailer issued weak guidance for the holiday season. The company, known for its yoga pants, says it’s expecting sales to range between $3.14 billion and $3.17 billion for the fiscal fourth quarter. That’s short of the $3.18 billion anticipated by analysts, per Refinitiv.

RH, the home furnishings retailer, slid 9% in after-hours trading. The company gave a disappointing outlook on revenue, calling for $3.06 billion to $3.08 billion, compared to the Street’s estimates for $3.08 billion for the fiscal year.

See more movers here.

–Darla Mercado, Tanaya Macheel

U.S. stock futures hovered near the flat line on Thursday evening.

S&P 500 futures slipped by 0.08%, while Nasdaq 100 futures inched lower by 0.09%. Dow futures lost 26 points or 0.07%.

–Darla Mercado