How US stocks survived a rollercoaster week | Nauris Treigys | Coins | January 2024

U.S. stock markets ended the week flat on Friday after facing a barrage of economic data that sparked volatility. Investors had to digest a variety of signals, from strong job creation and wage growth to weak services sector activity and global uncertainty. The Nasdaq 100 had its worst week since October, while the S&P 500 and Dow Jones had rallied for nine weeks. Market reaction reflected uncertainty about the direction of U.S. monetary policy and economic outlook.

The U.S. economy beat expectations, adding 216,000 jobs in December, the most in four months. Wage inflation has risen, pushing Treasury yields higher and lowering the odds of a Federal Reserve rate cut. Nvidia and AMD were among the few winners, each up more than 1.8% despite the tech selloff.

After the Japan Airlines crash, airlines recovered from a seven-day slump and rebounded for the second day. Healthcare stocks performed poorly, with United Health down 1.5% due to regulatory and political risks. The S&P 500 and Nasdaq fell 1.8% and 3.8%, respectively, for the week, while the Dow Jones index fell 0.7%.

Factory orders in November surged 2.6% compared to the previous month, recording the largest increase since January 2021, heralding a rebound in the manufacturing industry. The ISM Services PMI fell to 50.6 in December, the lowest level since May 2021, signaling a slowdown in the services sector. Average hourly earnings for all workers rose 0.4%, suggesting consumer spending rose beyond market expectations.

The U.S. unemployment rate remained at 3.7% in December as fewer people entered the labor market due to the Omicron variant. In 2023, the government sector added an average of 56,000 jobs per month, while the healthcare sector added 55,000 jobs. Total job growth in 2023 was 2.7 million, the lowest since 2019 excluding the year of the pandemic.

Wheat futures soared above $6.2 a bushel as China increased purchases, sparking demand from commodity funds. Wheat exports have risen sharply, boosting the global supply outlook, according to a USDA survey.

The dollar index fell to 102.0 as conflicting economic data clouded the Federal Reserve’s policy outlook. The British pound stayed at 1.27 dollars. UK consumer credit soared and services sector output expanded significantly. With euro zone inflation hitting 2.9%, pressure to cut interest rates eased and the euro stabilized around $1.09.

Bitcoin Bitcoin fell -2.22% and Ethereum fell -2.10% due to regulatory and security concerns.

Next week we will have US GDP, inflation, trade and producer price data. Other countries, including Switzerland, Mexico, Brazil, Australia and India, will also release CPI data. China will release data on consumer and producer inflation, trade and new yuan lending. Germany, the United Kingdom and several other countries will report key economic indicators to shed light on global economic trends.

U.S. markets experienced mixed signals during the week due to strong employment numbers, performance of various sectors, and global economic factors. Investors remain cautious as they balance economic growth, monetary policy, and geopolitical events. The coming week promises more insights, focusing on important economic indicators from the U.S. and around the world.