The stock market relinquished its nine-week winning streak on Friday, marking the longest consecutive weekly run in the green since 2004. This unexpected downturn set the Dow and the S&P 500 on track for the worst start to a year since 2016. The unsettling shift in momentum was fueled by new economic data that reignited the debate surrounding the timing of potential interest rate cuts by the Federal Reserve.
Investors initially absorbed positive labor market data, which was expected to influence expectations for the Federal Reserve’s interest rate decisions. However, as the day progressed, negative sentiment took hold, resulting in a weak finish and bringing an end to the impressive nine-week winning streak for both the Dow and S&P 500.
The Dow Jones Industrial Average (^DJI) managed to crawl above the flatline, while the benchmark S&P 500 (^GSPC) saw a modest climb of nearly 0.2%. The tech-heavy Nasdaq Composite (^IXIC) also experienced a slight uptick of about 0.1%. Despite these fluctuations, the major indexes exhibited a roller-coaster ride throughout the day.
The market’s response to the December US jobs report played a pivotal role in the day’s volatility. The report revealed that the US economy added 216,000 jobs in December, surpassing economists’ expectations of 175,000. However, the unemployment rate remained unchanged at 3.7%. Additionally, separate data from the Institute for Supply Management (ISM) indicated a slowdown in services activity for December, with the services PMI dropping to 50.6 from November’s 52.7, marking the lowest level since May.
As 2024 commenced, the stock market faced a stark reversal from the previous roaring rally, driven by optimistic expectations of the Federal Reserve’s potential easing of monetary policy. Doubts emerged regarding policymakers’ readiness to make such a pivot, contributing to the week’s slump.
Adding to the economic concerns, US bond yields continued to rise, with the 10-year Treasury yield (^TNX) increasing by approximately 5 basis points to 4.04%, following a surge on Thursday.
In other market developments, iPhone supplier Foxconn (2354.TW) announced expectations of a revenue drop in the first quarter due to slower market demand. This news impacted Apple (AAPL) shares, which had already suffered losses after two analysts downgraded the tech giant based on concerns about the sales of its next smartphone. The decline in Apple’s share price resulted in the erosion of over $175 billion in market value.
In conclusion, the unforeseen conclusion of the nine-week winning streak, juxtaposed against the backdrop of robust jobs data, reflects a market landscape marked by shifting dynamics and heightened sensitivity to economic indicators.
Source: Yahoo Finance
