Total nonfarm payroll employment increased by 223,000 in December, down from 263,000 in November but ahead of the consensus analyst expectation of 200,000. This positive jobs report had a significant impact on the stock market. At Friday's close, US stocks were firmly in the green, with the S&P 500 closing 2.8% higher at 3,895, the Nasdaq up 2.6% at 10,569, and the Dow up 2.1% to close at 33,631 points.
Investors reacted positively to the jobs figures, with traders cautiously optimistic that the data could soften the Federal Reserve's stance on interest rate hikes. The Dow was up 615 points, 1.9%, at 33,546, the Nasdaq Composite added 189 points, 1.8%, at 10,492, and the S&P 500 improved 71 points, 1.9%, at 3,879. However, there were mixed opinions on the jobs report. While payrolls growth exceeded forecasts, it still represented a slowdown from the previous month. The general consensus was that weaker data could lead to an earlier-than-expected slowdown in the Fed or even a cut in US rates. Despite the rally in US indices, there was hesitation to break above recent resistance, suggesting that a true rally has yet to develop.
US stocks opened the day's trading session in the green, driven by the stronger-than-expected jobs report. The Dow Jones Industrial Average added 409 points, 1.2%, at 33,339 points, the S&P 500 was up 43 points, 1.1%, at 3,851 points, and the Nasdaq Composite gained 79 points, 0.8%, at 10,384 points. The focus shifted to the upcoming CPI report, as markets were split on whether the Fed would raise rates by 25bp or 50bp at the February Federal Open Market Committee meeting. The softer wage situation could influence the decision, and a soft core CPI print could build the case for a smaller rate hike.
Tesla Inc shares fell 7.2% at the open due to price cuts on its Model Y and Model 3 vehicles in China and other markets. This sparked concerns about waning demand and competition from Chinese rivals. On the other hand, Costco Wholesale Corporation shares soared 5.4% following the release of its December sales figures, which showed increased business during the holiday period.
The US labor market remains strong despite inflationary pressures. The total nonfarm payroll employment report for December showed an increase of 223,000 jobs, exceeding expectations. Notable gains were seen in leisure and hospitality, health care, construction, and social assistance. The unemployment rate came in at 3.5%, below the expected 3.7%. Analysts noted that while this job growth is positive for workers, it could further contribute to high inflation and potentially lead to more rate increases by the Fed.
Wall Street is expected to start mixed as traders await the release of the key employment report. Futures for the Dow Jones Industrial Average rose 0.2%, while those for the S&P 500 gained 0.1% and contracts for the Nasdaq-100 shed 0.1%. The stronger-than-expected ADP jobs report and weaker weekly jobless claims numbers from the previous day weighed on equity markets. The lack of progress on Capitol Hill also contributed to negative sentiment. Analysts are expecting the US economy to have added 200,000 jobs in December, with unemployment likely to remain at 3.7%. A strong jobs report could lead to increased inflation expectations and a more hawkish policy response from the Federal Reserve.