US STOCKS-S&P, Dow eye first up day of 2024 on financials, strong jobs data
04/01/2024 19:27
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US private payrolls increase in December - ADP
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Allstate, JP Morgan hit record highs after broker reports
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Walgreens drops after slashing dividend
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Mobileye tumbles after weak annual revenue forecast
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Indexes: Dow up 0.37%, S&P up 0.13%, Nasdaq down 0.06%
(Updated to 1853 GMT)
By David French and Shristi Achar A
Jan 4 (Reuters) -
The S&P 500 .SPX and Dow Jones Industrial .DJI were on
course for their first positive sessions of 2024 on Thursday, as
financial stocks and strong jobs data prompted investors to
delay estimates of when interest-rate cuts could begin.
The recovery in two of the main U.S. stock indexes follows a
downbeat start to 2024, with the S&P 500 notching its worst
two-day performance since late October on profit-taking after a
blistering rally last year.
Bets that the Federal Reserve could start reducing rates
this year had driven much of the gains toward the end of 2023,
though the latest minutes from the central bank's December
policy meeting did not offer many clues on when the easing might
commence.
Traders see a 66.4% chance for at least a 25-basis point
(bps) rate cut in March and a near 93% probability for May,
according to the CME Group's FedWatch tool.
Financials .SPSY led gains among the S&P 500 sectors with
a 0.8% rise. The move was underpinned by Allstate ALL.N , which
hit an all-time high and was trading up 3.4% after Morgan
Stanley lifted its rating on the insurer to "overweight."
Other insurers also rose, with both American International
Group AIG.N and Hartford Financial Services Group HIG.N
touching their highest levels since 2008. At mid-afternoon, they
were up 0.9% and 1.7%, respectively.
Banks were strong performers ahead of the start of
earnings season next week. JPMorgan Chase & Co JPM.N hit a
record high, and was up 1.2%, after BofA Global Research raised
its price target. Truist Financial Corp TFC.N advanced 1.7%
after BofA upgraded its rating and price target.
An ADP National Employment report showed U.S. private
employers hired more workers than expected in December, pointing
to persistent strength in the labor market that should continue
to sustain the economy.
Private payrolls increased by 164,000 in December, compared
with a 101,000 rise the month before. Official U.S. employment
data are due on Friday.
"Today's numbers were a little muted. They weren't something
that says we need to cut rates tomorrow," said Joe Saluzzi,
co-manager of trading at Themis Trading in Chatham, New Jersey.
"So what you're seeing is people resetting expectations as
to when those rate cuts will start."
A weekly Labor Department report showed more Americans filed
for state unemployment claims than expected.
Yields on longer-dated U.S. Treasuries rose after the data,
with the yield on the benchmark 10-year note US10YT=RR back
close to 4% at mid-afternoon. US/
Investors also assessed the S&P Global's final reading of
composite PMI data for December at 50.9, compared with a
preliminary reading of 51.0.
At 1:53 p.m. ET, the Dow Jones Industrial Average .DJI was
up 140.2 points, or 0.37%, at 37,570.39, and the S&P 500 .SPX
was up 6 points, or 0.13%, at 4,710.83. However, the Nasdaq
Composite .IXIC was down 8.1 points, or 0.06%, at 14,584.14.
Despite the overall positive tone, most S&P sectors were
down, led by energy .SPNY which fell 1.1% after a massive U.S.
fuel inventory build pushed crude prices lower. O/R
Apple AAPL.O shares slid 0.8% after brokerage Piper
Sandler downgraded the iPhone maker to "neutral", days after
Barclays also cut its rating.
Dow component Merck MRK.N added 2.2% after TD Cowen
upgraded the drugmaker to "outperform" on growth prospects.
Mobileye Global MBLY.O sank 26% after forecasting
preliminary fiscal 2024 revenue below estimates, while Walgreens
Boots Alliance WBA.O shed 6.6% after the U.S. pharmacy chain
nearly halved its dividend.
(Reporting by Johann M Cherian and Shristi Achar A in Bengaluru
and David French in New York; Editing by Devika Syamnath and
Richard Chang)
((johann.mcherian@thomsonreuters.com;))