Buzz on Business for Monday, January 8^th, 2024

Really good news from the labor market on Friday. But, interest rates rose, and stocks faltered as the news was released an hour before the opening bell. We wondered, “Are we back to the Orwellian good news is bad news again?”

But markets righted themselves soon enough, and after five brutal days, we got just a little bit of sunshine.

Stock Market Report

Green numbers all up and down on the Giant Quote Machine on Friday. We’d almost forgotten what that looked like.

• The Dow Jones Industrials were up twenty-six points—not much, but a win is a win—that’s just shy of one-tenth of one percent, and they closed at 37,466
• The S&P 500 gained two-tenths of a percent. It closed at 4,697, up nine points.
• The Nasdaq Composite was up one-tenth, that’s 14 points, and the techs closed 14,524
• The RSP, the Equal Weight S&P 500, and the SOXL, the SOX Semiconductor Index with three-to-one leverage, were up three-tenths of a percent and 1.4%, respectively. We’re running an experiment on portfolio risk management this year and using those two funds as our guinea pigs.

Bond Markets

Bonds closed the week mixed, but we’ve noticed a trend. The Yield Curve has been righting itself over the last month or so. It’s still inverted, which means short-term rates are higher than long-term rates, and that’s not a good sign, but it’s moving in the right direction, which is.

• The yield on the two-year Treasury fell but by less than a tick. It closed at 4.383%
• The twenty-year was up five basis points, and it now yields 4.358%

Oil and Gold

• Oil continued its mini-trend upward. It gained $1.56 and closed at $73.89.
• Gold was all over the place. It traded in a wide range, up and down, but closed about where it started at $2,049.80, down a minuscule two cents.

Labor Market Remains Strong

The labor market continues to exceed expectations.

• The economy created 216,000 new jobs in December, versus expectations of170K and 173K last month
• Average hourly earnings were up 0.4% in December versus expectations of 0.3%. The year-over-year number was also good. Wages rose by 4.1% in 2023, better than inflation!
• The Unemployment rate was expected to come in at 3.8% but also beat expectations and stands at 3.7%
• The Labor Force Participation rate, which I watch closely, disappointed just a bit. 62.5% of the labor force had a job last month. That’s versus expectations of 62.8%
• Even Factory Orders exceeded expectations. They were up 2.6%, and economists predicted 2.1%. Could this be the beginning of a rebound in manufacturing?

Friday’s market reaction to the robust jobs report paints a complex picture. The initial jitters and subsequent upswing suggest a nuanced relationship between good news and market sentiment. Meanwhile, the persistent inversion of the yield curve casts a shadow, even as it shows slight improvements. Could this be a turning point for manufacturing, as factory orders surpassed expectations? Only time will tell, but one thing’s certain: with data exceeding, confusing, and contradicting, this economic puzzle keeps us buzzing.