Buzz on Business for Wednesday, December 6th, 2023

On Monday, weakness in the tech sector pulled down stocks generally and seemed to put a damper on the enthusiasm generated by this five-week-long rally. Yesterday, it was strength in those very same techs that put a floor under stocks and kept them from falling further.

Closing Numbers

• Dow Jones Industrials: Lost 80 points (0.2%) and closed at 36,125.
• S&P 500: Experienced a minor setback, shedding three points and closing at 4,567.
• Nasdaq Composite: Gained 42 points (0.3%), closing at 14,230.
• S&P Retailers (XRT): Notably down by 2.7%, starting the day at 65.98.

Rates and Commodities:

• Rates were down across the board.:
  • The two-year Treasury closed with a yield of 4.577%, down by eight basis points.
  • The twenty-year Treasury saw a more substantial drop, with a yield of 4.473%, down by 14 basis points.
• Oil closed at its low for the day at $72.07, down $1.19.
• Gold retraced gains, slipping by $4.30 to close at $2,038.

Shifting Sentiments: From Hot to Soft: It wasn’t that long ago, weeks rather than months, that the biggest worry that traders had was that the economy was too hot. Retail Sales, Corporate Profits, GDP, and the labor market – especially the labor market were too strong and would not give the Federal Reserve the space to cut rates or even stop raising them. You may remember that "pause" was a watchword. "Higher for Longer." All of that was in the news.

Now, it appears the script has flipped or is starting to flip, and the concern is that the economy is too soft. More and more, we see stories about a recession next year.

JOLTS Report:

Those fears were heightened, perhaps just a bit, by the release yesterday morning of the JOLTS report. The JOLTS report tracks the number of job openings throughout the economy. It’s been coming down in fits and starts since early last year. Yesterday, the report missed expectations. As we know, Wall Street is an expectations game, so the world must be coming to an end.

In reality, the number of unfilled job openings soared to unprecedented and unsustainable levels as the economy emerged from the pandemic. To us, here at World Headquarters, it appears to be returning to trend and is still roughly double what it was just ten years ago.

The labor market is fine. If anything, it’s still too tight. But, if the stock market climbs a wall of worry, stocks should do very well indeed

Earnings, ADP Non-farm Payroll, and Initial Jobless Claims: On the earnings front, nothing of consequence to report. Investors await the ADP Non-farm Payroll report and Initial Jobless Claims for more insight into the labor market.