Major Averages Posting Moderate Gains In Afternoon Trading

After recovering from an initial move to the downside, stocks have fluctuated over the course of the trading session but largely maintained a positive bias. With the upward move, the Nasdaq and the S&P 500 are on pace to end the session at their best closing levels in well over a year.

Currently, the major averages are posting moderate gains. The Dow is up 95.41 points or 0.3 percent at 36,212.79, the Nasdaq is up 58.69 points or 0.4 percent at 14,398.68 and the S&P 500 is up 14.27 points or 0.3 percent at 4,599.86.

The initial weakness on Wall Street came after the Labor Department released stronger than expected jobs data, partly offsetting recent optimism about the outlook for interest rates.

The closely watched report said non-farm payroll employment jumped by 199,000 jobs in November after rising by 150,000 jobs in October. Economists had expected employment to climb by 180,000 jobs.

The Labor Department also said the unemployment rate dipped to 3.7 percent in November from 3.9 percent in October. The unemployment rate was expected to remain unchanged.

Treasury yields jumped following the release of the report amid concerns strength in the labor market could lead the Federal Reserve to postpone cutting interest rates.

Selling pressure waned shortly after the start of trading, however, as traders remain optimistic the next move by the Fed will be a rate cut even if it comes later than hoped.

Buying interest has also been generated in reaction to a University of Michigan report showing a pullback in consumers’ inflation expectations in the month of December.

The report said year-ahead inflation expectations plunged to 3.1 percent in December from 4.5 percent in November, falling to their lowest level since March 2021.

Long-run inflation expectations also fell to 2.8 percent in December from 3.2 percent in November, matching the second lowest reading seen since July 2021.

“For the Fed this is significant because it would be difficult for the Fed to formally complete its rate hike campaign if consumer expectations continued to climb higher, as ‘unanchored’ expectations would continue to feed inflationary pressures,” said Quincy Krosby, Chief Global Strategist for LPL Financial.

She added, “Still, a more confident consumer, coupled with a stronger labor market, could thwart the Fed’s attempt to dampen consumer demand.”

Sector News

Computer hardware stocks continue to see significant strength on the day, with the NYSE Arca Computer Hardware Index climbing by 1.7 percent.

Considerable strength also remains visible among banking stocks, as reflected by the 1.3 percent gain being posted by the KBW Bank Index.

Energy, brokerage and housing stocks are also seeing notable strength, while gold and airline stocks have come under pressure over the course of the session.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan’s Nikkei 225 Index tumbled by 1.7 percent, while South Korea’s Kospi jumped by 1.0 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the French CAC 40 Index surged by 1.3 percent, the German DAX Index advanced by 0.8 percent and the U.K.’s FTSE 100 Index climbed by 0.5 percent.

In the bond market, treasuries have climbed well off their worst levels of the day but remain sharply lower. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 10.4 basis points at 4.233 percent.

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